Powell US central bank needs strong role in overseeing stablecoins.
The Federal Reserve Chairman, Jerome Powell, has expressed the need for strong central-bank oversight in the creation of regulations concerning stablecoins by lawmakers in the House Financial Services Committee. In a testimony given at a hearing on monetary policy, Powell stated that payment stablecoins are viewed as a form of money and that the ultimate source of credibility in money in all advanced economies is the central bank. Powell believes that it would be appropriate to have a robust federal role in stablecoin regulations. The Fed’s staff has also been involved in discussions with lawmakers from both parties on the crypto legislation members of the committee have been working on.
Chairman Patrick McHenry (R-N.C.) will be marking up two crypto bills in late July at an open session that invites debate or edits to the details of a bill before it gets a committee vote. The two bills are the much-debated stablecoin legislation and a wider bill that would set the overall market structure and oversight for cryptocurrencies in the U.S.
Rep. Maxine Waters (D-Calif.), the committee’s ranking Democrat, questioned Powell on the latest legislative proposal from Republicans, stating that it would leave the Fed “severely hamstrung” and that it needs to establish a strong federal floor for oversight of nonbank stablecoin issuers. Powell also addressed the debate over whether the U.S. should establish a central bank digital currency, stating that it is still a long way off. If the Fed were to set up a digital dollar, Powell said the central bank has no interest in managing retail accounts and that they would be managed through the banking system instead.
UPDATE (June 21, 2023, 15:53 UTC): Adds Powell testimony on establishing a U.S. digital dollar.
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Edited by Aoyon Ashraf.