Federal Reserve Chairman Jerome Powell said in a press conference on Wednesday (Dec. 15) that he doesn’t think cryptocurrencies are a concern for financial stability, calling them “really speculative assets,” per a MarketWatch report.
That statement comes as the Fed readies to speed up its tapering of bond purchases and is planning three hikes next year for the benchmark interest rates.
However, Powell said cryptocurrencies didn’t factor into any economic worries right now.
“I don’t see them [cryptocurrencies] as a financial stability concern at the moment,” Powell said. “I do think they are risky, they’re not backed by anything, and I think there’s a big consumer issue for consumers who may or may not understand what they’re getting.”
Powell also said stablecoins would likely have a role in the future, and mentioned the President’s Working Group report, which said Congress should pass new laws to make it so stablecoins had to be issued by insured banks.
He continued that stablecoins could be “useful” and efficient, if properly regulated. He also added that there was the potential for the coins to scale, especially if they’re affiliated with a large tech network.
The Fed has been looking into the potential of issuing a U.S. digital currency, although federal officials have been split on the issue and there’s no concrete date for this to happen. If it does go forward, a digital dollar might be able to be accessed on mobile phones, with the effect of cutting down on costlier, cumbersome electronic payments.
The federal version of the coin would be issued and backed by the Fed, the same way U.S. paper dollars and coins are currently.
The Federal Reserve might also look into launching a new digital coin, which would compete with stablecoins. The Fed has a goal to keep cash relevant even as the world is losing interest in the form of currency.
Read more: Fed Finalizes Analysis, Report on Digital Currency