• U.S. Federal Reserve Chair Jerome Powell has classified stablecoins as a distinct “form of money” that necessitates rigorous oversight from central banks.
• This comes in response to Congresswoman Maxine Waters’ inquiry about the regulatory landscape of payment stablecoins.
• Powell cautioned against the potential pitfalls of leaving the Federal Reserve with a diminished role in overseeing the extensive proliferation of private money creation at the state level, hinting at tighter regulations for stablecoins.
Stablecoins Classified As A Form Of Money
U.S. Federal Reserve Chair, Jerome Powell, delivered a significant message regarding the regulatory landscape of payment stablecoins, unequivocally classifying them as a distinct “form of money” that necessitates rigorous oversight from central banks. This pivotal statement was made in response to Congresswoman Maxine Waters’ thought-provoking inquiry during a recent hearing held on June 21.
The Need For Central Bank Oversight
Waters, astutely acknowledging the growing prominence of stablecoins as a preferred payment method, sought clarification on whether the Federal Reserve considers these digital assets to fall under its regulatory purview . Furthermore, she advocated for a comprehensive regulatory framework that applies equally to traditional banking institutions and non-bank entities involved in currency transactions or payment processing.
Powell Warns Of Potential Pitfalls
Powell, displaying his astute understanding of the core tenets of monetary systems, emphasized that the central bank serves as the ultimate arbiter of credibility in money. Consequently, he stressed the imperative for the Federal Reserve to assume a robust federal role in shaping the future trajectory of various forms of money, including stablecoins. With conviction, he cautioned against the potential pitfalls of leaving the Federal Reserve with a diminished role in overseeing the extensive proliferation of private money creation at