Federal Reserve Chairman Jerome Powell said the central bank is “not seeing a really significant macroeconomic impact” from crypto’s volatility. The Fed chairman stressed that there is a need for a better crypto regulatory framework.
Fed Chair Powell says crypto needs better regulation
Federal Reserve Chairman Jerome Powell testified Wednesday before the Senate Committee on Banking, Housing and Urban Affairs on the “half-annual monetary policy report to Congress.”
Senator Kirsten Cinema (D-AZ) asked him whether the Fed is tracking crypto activity given recent market volatility, and what are the implications of crypto on the macroeconomic outlook and monetary policy.
“We’re tracking those events very carefully, of course,” replied Powell, elaborating:
[We are] Not really seeing significant macroeconomic impacts so far.
“The main implication is exactly what we have been saying, and others have been saying for some time, which is that in this very innovative new space, there is, in fact, a need for a better regulatory framework,” he emphasized.
The same activity should have the same regulation no matter where it appears and this is not the case now.
In March, the Fed chairman said: “Our current regulatory framework was not designed with the digital world in mind … stablecoins, central bank digital currencies, and digital finance more generally, existing laws and regulations or even That would require changes to entirely new rules and frameworks.”
Powell also told the Senate Banking Committee on Wednesday that the central bank is determined to reduce inflation, which he believes the Fed can do. “At the Fed, we understand that high inflation is causing hardship. We are strongly committed to bringing inflation back down and we are moving rapidly to do so.”
Regarding the US economy slipping into recession, he stressed: “It’s not exactly our intended outcome, but it’s certainly a possibility, and clearly the events of the past few months around the world have made it a point for us.” It’s made more difficult to achieve. What we want is 2% inflation and still a strong labor market.”
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