Speaking today at the US House Financial Services Committee’s semi-annual monetary policy testimony, the Federal Reserve Chairman said, Jerome Powell, said, “We see stablecoins as a form of money.” The comments were made in Powell’s first testimony before Congress since March.
Powell was primarily present to discuss the Fed’s recent decision to suspend interest rate growth and hikes in the country. Following that, he delved into the digital asset sector, noting the central bank’s perspective on stablecoins and their place in the country’s economic outlook.
Powell Discusses Stablecoins in New Testimony
The Federal Reserve has been in a frenzy over the past year as the agency battles inflation. And its annual rate hikes to combat that figure are well-documented. However, certain hikes were suspended and the practice ended this month.
Following that, the Fed chief appeared before Congress today in his semi-annual monetary policy testimony. There, he discussed the interest rate decision and the central bank’s plan for a continued inflation fight. However, he also delved into the field of digital assets in comments made in his appearance.
In particular, Fed Chair Jerome Powell said, “We see stablecoins as a form of money.” Indeed, comments echoed a similar sentiment Powell revealed in September 2022, discussing Stablecoins. In discussing digital asset regulation, he referred to assets as “personal forms of money”.
“The central bank has always been the main source of trust behind money. Stablecoins basically borrow that trust from the underlying issuer, and in many cases, these are dollar stablecoins, so they actually borrow that trust,” noted Powell. “These are individual forms of money. If their stock isn’t filled with very high-quality assets, they’re subject to runs, so a discipline has to work there.
Powell’s comments today reinforced that view of the Fed. Specifically, identifying the agency’s view that stablecoins represent a form of money for users. However, their view of its place in the current financial market and regulatory preferences remain to be seen. Furthermore, they have not yet been fully addressed by the agency or Powell.
