The Federal Reserve Bank of New York’s President and CEO, John Williams, believes the institution should constantly watch the cryptocurrency industry’s developments and, if required, alter its financial rules. Stablecoins and central bank digital currencies (CBDCs) have a stronger chance of succeeding in the future monetary network, according to him.
Williams, like many other central bankers, is an outspoken opponent of the cryptocurrency industry. He claimed in 2018 that digital assets failed to “pass the test of what a currency should be.” He further warned that criminals may employ them in illegal operations.
Williams, on the other hand, seems to have softened his attitude. The New York Fed President has stated that the asset class is rapidly evolving and has the potential to change the payment system. As a result, the Federal Reserve may alter its monetary policy rules. The institution should also aim to build a market-wide regulatory framework to provide investors with further protection:
“Therefore, it’s critical that we understand how these transformations could affect the economy and the financial system, as well as monetary policy implementation and central bank balance sheets. In addition, we must think carefully about proper regulation to protect consumers and investors and ensure the stability and safety of the financial system.”
Williams hasmentioned many forms of cryptocurrencies. Stablecoins, which are “fully backed by safe and liquid assets,” and CBDCs, in his opinion, are the most promising. They both have the ability to enhance the payment network, notwithstanding certain dangers, he noted.
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