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Critical Statements from FED Senior Officials – They Also Talked About Cryptocurrencies

Critical Statements from FED Senior Officials – They Also Talked About Cryptocurrencies

BitcoinsistemiBitcoinsistemi2024/11/12 18:22
By:Mete Demiralp

Two senior FED officials touched on important issues, including the cryptocurrency sector, in their statement today.

In his recent statements, FED member Christopher Waller reiterated his opposition to the launch of a digital currency in the United States, pointing to the role of the private sector in financial innovation.

Waller said the Fed must manage financial stability risks while supporting technological advances. He noted the Fed's commitment to improving the efficiency and security of the payment system, and that he believes this will benefit American households, businesses and the broader economy.

Waller expressed skepticism about the necessity of a central bank digital currency (CBDC) in the US, explaining that private companies are in a better position to explore and implement new financial technologies. According to Waller, “The government will have a hard time competing with the private sector in terms of efficient resource allocation and addressing deficiencies in the payments system.” However, he noted that some systemic problems in payments cannot be completely solved by private companies alone, and that the Fed will continue to provide the basic clearing and settlement infrastructure.

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Waller also touched on stablecoins, describing them as a “synthetic dollar” with potential benefits for the financial system. However, he warned of potential risks, particularly the threat of bank runs, and said strong regulation is needed to ensure stability as these assets develop.

Fed member Thomas Barkin offered a separate optimistic view of the U.S. economy. Speaking at the Baltimore Joint Summit, Barkin argued that the strength of the economy gives the Fed more flexibility in managing borrowing costs. “A strong but more selective consumer, combined with a more productive and higher-value workforce, makes for a very good economic situation,” Barkin said. He said that while interest rates have retreated from their recent peaks, they remain above historic lows, giving the Fed room to respond as economic conditions change.

Barkin outlined two possible economic scenarios: In one, as election uncertainty recedes, companies reinvest and hire more, which could allow the Fed to focus on inflation risks. Alternatively, firms could reduce hiring to counteract diminished pricing power, increasing business risks that could affect the Fed’s future decisions on rate adjustments.

*This is not investment advice.

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