The Federal Reserve has been giving a lot of consideration to cryptocurrencies and their potential effects on the economy.
The Fed Governor Lael Brainard quite recently inclined a rare Fe’s hand on cryptocurrencies, giving specific details that normal and indicating the resources that the agency has devoted to better understand the market.
During a Fed conference in San Francisco, Brainard is quoted in Reuters as having stated:
“Cryptocurrencies are strikingly innovative but also pose challenges associated with speculative dynamics, investor and consumer protections, and money-laundering risks.”
During the course of the week, James Bullard, St. Louis Federal Reserve Bank President was present at the Consensus 2018 conference in New York. Policymaker has been cautious to partake in the cryptocurrency market, yet as the market has expanded, it seems to be increasingly making efforts to avoid it.
For the FED, the potential dangers are far greater than the benefit, and according to Brainard, the blockchain is being used to streamline payments, trillions of dollars in bank-to-bank transactions and limited payment applications.
Brainard almost shut all possibilities of a “Fedcoin,” something market participants were highly predicting about possible indications like are fellow Bullard’s attendance at the conference.
However, regardless of the fact that the Federal Reserve seems devoted to keeping its distance from the cryptocurrency market, Brainard does not erase the idea of the agency joining it.
“There is no compelling demonstrated need for a Fed-issued digital currency,” she said.”
On the other hand, Former Fed Governor Kevin Warsh has a different opinion. If he were a policymaker today, he will put in efforts to explore the potential benefits of a Fedcoin that will enhance, not “supplant” fiat money.