According to Federal Reserve Chair Jerome Powell, emerging forms of digital money, such as cryptocurrencies and stablecoins, represent a threat to the financial system in the United States and will require the implementation of new rules in order to protect consumers.
Powell expressed his views during a panel discussion
On Wednesday afternoon, during a panel discussion hosted by the Bank for International Settlements, a worldwide organization of central bankers, Powell predicted that new technology will make electronic payments cheaper and quicker in the near future.
His contention is that these new financial entities have the ability to harm conventional financial institutions.
In order to prevent money laundering and other crimes from taking place, digital currencies issued by central banks would need to preserve user privacy, be “identity verifiable,” and be “intermediated,” or widely accepted, by the existing banking system.
Powell sat on a virtual panel on Wednesday at the Bank for International Settlements Innovation Summit, during which he said that cryptocurrency assets “have been used to fund illicit behavior” and that this must be stopped.
Crypto rage is unstoppable, despite the lack of support from the Chairman
Despite the fact that Federal Reserve Chairman Ben Bernanke has not supported a digital dollar, central bankers in the United States are doing research and testing on digital currencies.
In a white paper released in January, Federal Reserve officials studied the risks and advantages of a central bank digital currency but did not approve of one. In order to improve the paper, they are currently seeking feedback.