Main to remember
- The FEDE supports a regulatory framework for stablecoins to protect consumers, as President Jerome Powell said.
- Powell highlighted the need to balance innovation by protecting financial stability.
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The Fed supports efforts to establish a regulatory framework for Stablecoins to protect consumers, President Jerome Powell said on Tuesday at the Senate banking committee. He added that the central bank “offers technical thoughts”.
The thrust for the regulation of stablescoin occurs despite the warnings of the former secretary of the Treasury, Janet Yellen, who repeatedly stressed the urgency of carrying these digital assets under regulatory supervision.
During the hearing, Powell, which previously compared stablescoins to regulated bank deposits and the common funds for the money market, also stressed the need to reassess the dispenser, recognizing the unexpected consequences of the regulation on the industry cryptographic.
He said he would be determined to collaborate with the chairman of the Tim Scott committee to mitigate the undue regulatory charges and explore changes to ensure fair treatment for cryptographic companies. The issue of Crypto Dépannage firms was underlined while legislators continue to investigate its implications.
Regarding the Fed’s approach to monetary policy, Powell said that there was no urgency to reduce interest rates given the strong American economy and continuous efforts to achieve a goal of 2%inflation.
According to Powell, the US economy increased by 2.5% in 2024, driven by robust consumption expenses. The labor market remains resilient, the monthly payroll gains on average 189,000 in the last four months and unemployment 4% in January.
Although inflation has decreased considerably in the past two years, it remains above the target. Prices for basic personal consumer expenditure increased by 2.8% in the 12 months until December, excluding food and energy costs, while the total prices of the PCE increased 2.6%.
“We know that reducing the restraint of policies too quickly or too much could hamper the progress of inflation,” said Powell. “At the same time, the reduction in the restriction of policies too slowly or too much could unduly weaken economic activity and employment.”
The Fed has maintained interest rates of 5.25% to 5.5% since July, after aggressive increases to combat inflation. Future adjustments in the policy will depend on incoming data, the evolution of perspectives and the balance of risks, according to Powell.
It is a story in development.
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