Stablecoins are a “form of money” over which the central bank ought to have some level of authority, said Federal Reserve Chairman Jerome Powell before Congress on Wednesday.
The chairman also confirmed that the Fed does not intend to directly issue a Central Bank Digitial Currency (CBDC) in the United States.
During a hearing related to monetary policy, Powell acknowledged that the crypto industry has some “staying power” – but also how its market cap has retraced massively since last year.
In the past, Powell has dismissed Bitcoin and other cryptos as failed forms of money. Stablecoins, however, have been a point of greater focus, for which he’s advocated careful regulation.
“We do see payments stablecoins as a form of money,” Powell said on Wednesday. The chairman added that central banks remain the ultimate source of credibility on money and that there should be a robust federal role it has to play in the industry.
“Allowing a lot of private money creation at the state level would be a mistake” he added.
Though a CBDC is still on the table for the Federal Reserve, Powell said it wouldn’t consider creating one issued directly by the central bank.
“We would not support accounts at the Federal Reserve by individuals,” he said, citing privacy concerns. “At some point in the future, a CBDC would be one that was intermediated through the banking system and not directly at the Fed.”
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