Jerome Powell, Federal Reserve Chair, noted in a webinar today that providing "regulatory answers" for stablecoins serves as a "high-level focus" for the central bank.
The webinar was hosted by Yahoo Finance and was in nature an interview conducted by the Princeton economist Markus Brunnermeier.
While being asked about CBDCs, or central bank digital currencies, Powell noted, "We've been very focused… on potential regulatory answers for global stablecoins, in particular."
"So that's been a high-level focus, and that will continue to be a high-level focus because they could become systemically important overnight and we don't begin to have, you know, our arms around the potential risks and how to manage those risks, and the public will expect we do and has every right to expect that… It's a very high priority."
Obviously, such a similar view has been echoed by European Central Bank President Christine Lagarde. Last November, she released an op-ed that warned that stablecoins, if widely adopted, could "threaten financial stability and monetary sovereignty" around the world. Other global financial bodies, like the G7 and G20 international forums, have expressed similar concerns.
Powell didn't detail how exactly the Fed tries to approach stablecoins going forward, however, his tone indicates these sorts of private digital currencies are very much on the bank's radar. "threaten financial stability and monetary sovereignty" around the world. Other global financial
When it comes to CBDCs, Brunnermeier asked Powell whether he was interested in waiting to see how they performed in smaller countries first, prior to experimenting with a digital version of the US dollar.
Powell also echoed, making the explanation that there's no reason the US needs to get there first. "Since we are the world's reserve currency, we actually think we need to get this right, and we don't feel an urge or need to be first," he said. "We effectively already have a first-mover advantage, because we're the reserve currency."
Up to date, China is zealous to build its own CBDC, and South Korea, Thailand, Japan, and France are all exploring their options.