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Crypto-currencies "innovative" but "pose challenges": the governor of the Federal Reserve


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The Federal Reserve has thought a lot about crypto-currencies and their potential impact on the economy.

More recently, Fed governor Lael Brainard provided a handshake from the Fed on digital currencies, taking more time, offering more detail than usual and demonstrating the resources that the Agency has devoted to understanding this market.

Speaking at a Fed conference in San Francisco, Brainard told Reuters:

"Cryptocurrencies are surprisingly innovative but also pose challenges associated with speculative dynamics, investor and consumer protection, and money laundering risks."

Earlier this week, James Bullard, president of the St. Louis Federal Reserve, presented at the 2018 Consensus Conference in New York. Decision makers may have been slow to engage in the cryptocurrency market, but as the market has exploded, they seem to be increasingly trying to get out as much as possible.

Risk and Reward {19459013]

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Source: Shutterstock

For the Fed, the risks clearly outweigh the rewards, the last of which Brainard has described as the blockchain used to streamline payments, the trillions of dollars in inter-bank transactions and limited payment requests.

The risks, well-established, include the propensity of digital currencies, especially those with more anonymous characteristics, to be used in fraud given the lack of centralized control and the vulnerable position that consumers and investors can place accordingly. She also echoed the tone of other policy makers when she said that digital currencies, while "problematic", are not a sufficiently important part of the global economy to risk destabilizing them

].

Fedcoin

Brainard also almost placed a nail in the coffin for the possibility of a "Fedcoin", something that market participants were speculating more and more about given signs like the presence of his colleague Bullard at the blockchain conference.

But despite the fact that the Federal Reserve seems determined to keep its momentum on the cryptocurrency market, Brainard denied the idea of ​​the agency that joined him. There is probably no lost love between the cryptocurrency community, whose technology is designed to bypass the centralized authorities, and the Fed.

"There is no compelling need demonstrated for a digital currency issued by the Fed," she said.

Kevin Warsh, former Fed governor, sees things differently. While he was a political decision maker today, he would dedicate a team to explore the benefits of a Fedcoin that would complement, not "supplant" fiduciary money, according to the New York Times. .

Warsh could consider a Fedcoin that would introduce "legal activities in a digital currency". However, the avant-garde Warsh is not evident in the current Fed regime.

Pictures of Shutterstock

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