While yesterday at a presentation by the President of the Boston Federal Reserve, Eric Rosengren, several members of cryptoTwitter were surprised by the idea of ​​regulation and supervision, the central bank can simply think of the future.

In a presentation titled “Financial Stability,” Rosengren identified the stablecoin name Tether as part of three different “Financial Stability Challenges.” Challenges include housing market risks, the need for emergency credit facilities in times of crisis, and “recurring disruptions in short-term credit markets,” where Tether is seen as the one who can break.

Another slide notes that stablecoins are growing rapidly in terms of market capitalization and now account for about 20% of the total AUM of the underlying money market mutual funds:

“The reason we should be a little worried about stablecoins is that they are growing very quickly, so stablecoins will grow exponentially,” Rosengren said in an interview with Yahoo Finance. “[…] I think we need to think more about what can disrupt short-term credit markets over time, and stablecoins are certainly a factor. “

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Finally, while Caitlin Long, CEO of financial group Avanti, sounded the alarm that this could be a sign that the Federal Reserve is laying the groundwork for a regulatory framework for stablecoins, Rosengren finally appears to have a more moderate opinion.

3 / And that’s part 2.

Again, every dollar eventually overtakes the Fed, meaning that the Fed has authority over the USD #Stablecoins. What is important is that the Fed says that. Warning in advance, guys. pic.twitter.com/iWkO7AoUpn

– Caitlin Long (@CaitlinLong_) June 25, 2021

Rosengren noted that the rise in stablecoins does not pose a threat to credit markets but instead needs to be examined for the risks they may pose if they continue to grow as a segment of the credit market and how much the Fed can support stablecoin-dominated markets:

“I am really concerned that the stablecoin market is currently unregulated as it is growing and becoming a more important sector of our economy that we need to think seriously about what happens next. And just as money market funds caused a terrible disruption in credit markets, I think a future financial stability problem could arise if we don’t think carefully. Be careful what happens to things like stablecoins the next time we have a bad market to have. ”

Rosengren also noted that “we actually had a stablecoin last week that was in financial trouble,” but declined to be named. Despite being asked twice by his mentor Brian Cheung, Rosengren declined to say whether or not the Fed would be involved in “assisting” Tether or other stablecoins, should they ever pose a risk to the markets.

However, he noted that backing Tether and other stablecoins “looks like a portfolio of an underlying money market fund, but can be riskier,” and therefore the liquidity added to the money market in times of crisis will be effective in backing Tether as well .

Tether first released its full reserve balance sheet in March and closed a lawsuit with NYAG in February alleging that the extent to which stablecoins are backed by fiat was not adequately reported.