Among the macroeconomic implications of cryptocurrency volatility, Fed chair Jerome Powell says there are none that stand out. A better crypto regulatory framework is needed, according to the Fed chair.
Fed Chair Powell Says Crypto Needs Better Regulation
Federal Reserve Chairman Jerome Powell testified before the Senate Committee on Banking, Housing, and Urban Affairs on “the semiannual monetary policy report to congress” Wednesday.
Senator Kyrsten Sinema (D-AZ) asked him whether the Fed has been tracking crypto activities given the recent market volatility, and what implications crypto has on the broader economic outlook and monetary policy.
“We are tracking those events very carefully, of course,” Powell replied, elaborating:
[We are] not really seeing significant macroeconomic implications, so far.
“The principal implication is really what we’ve been saying, and others have been saying for some time, which is that in this very innovative new space, really, there is a need for a better regulatory framework,” he emphasized.
The same activity should have the same regulation no matter where it appears and that isn’t the case right now.
In March, the Fed chair said: “Our existing regulatory frameworks were not built with a digital world in mind … Stablecoins, central bank digital currencies, and digital finance more generally, will require changes to existing laws and regulation or even entirely new rules and frameworks.”
Powell also told the Senate banking committee on Wednesday that the central bank is determined to bring down inflation which he believes the Fed can make happen. “At the Fed, we understand the hardship high inflation is causing. We are strongly committed to bringing inflation back down, and we are moving expeditiously to do so,” he said.
Regarding the U.S. economy possibly sliding into a recession, he stressed: “It’s not our intended outcome at all, but it’s certainly a possibility, and frankly the events of the last few months around the world have made it more difficult for us to achieve what we want, which is 2% inflation and still a strong labor market.”
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