Mark Crumpton, Bloomberg David, Rohit Chopra discussed on Balance of Power


I'm Mark crumpton This is Bloomberg David Thank you so much Mark Well one of the big stories from last week actually had to do with cryptocurrency and so called stablecoins with some reports that people lost as much as $260 billion when particularly some of those stablecoins came off of their dollar peg We turned out to somebody who's really involved in figuring out how to regulate cryptocurrencies and stablecoin He is Rohit Chopra He's director of the consumer financial protection bureau So we're going to thank you so much for being back with us Great to have you here So where are we on regulation I know that The White House is commissioned you and others to take a look at it give a report back We're going to get it over a period of months But in the meantime the marketplace is going ahead is the government behind Well we have to look at actually what just happened last week A lot of people thought that a stablecoin was just going to be as good as a dollar just like depositing it in an FDIC insured account but they're learning that it's not So stablecoins are something that all the regulators are looking at Most stablecoin use right now is really for speculative trading to go in and out of cryptocurrencies And people wonder is it going to be one day used for consumer payments and many are thinking it's not ready yet Is it like a money market effectively Well in some ways people compare it to that but do we want that How do we want to regulate it And for what use when it's at an investment the SEC is working on things But when it comes to consumer payments it's not just stablecoins it's all sorts of emergence emerging payment technologies We see on our mobile device and others And we need to make sure we understand everything from privacy security and when people have errors or deal with fraud that they have some recourse And right now many people don't know where to turn And let's be clear it's very complicated It's certainly more complicated than I'm going to understand You understand it much better than I do But you can understand why people are out in the marketplace saying in the meantime I'm losing money and we're waiting for regulation And in fact a lot of the crypto people are saying we want regulation We want some rules of the road So realistically when do you think we can have some foreign regulation decided on Well I think you're going to see a lot of movement this year in terms of The White House that's asked all the regulators to publish a set of reports There's already activity going on at the regulators to to me we've got to crack this code of what do we want the future of our payment system to look like The fed is going to be launching its new fed now system which is going to create really real-time payments for consumers and businesses But again people need to know that that stable coin is not the same as depositing it in an FDIC insured account Well I think you have caused some ripples and asking questions about payment systems It goes beyond cryptocurrencies To some of the big tech things like that people are saying well wait a second Where is this going How does it work How does this fit together from your point of view in terms of protecting the consumer Yeah I mean I look at what is happening in China where you see AliPay WeChat pay so ubiquitous and combining with their broader tech businesses You know we need to ask ourselves do we want Google Do we not want Facebook controlling a lot of flow of payments and using that data in ways we may not understand Let's talk about something a little more traditional which is banks And bank mergers Give us a sense of that There was a long time that was thought that there was a pent up demand in the regional banks for mergers Are they getting together now Well you do see markets pushing for some mergers And right now at the FDIC the board has launched a review of our bank merger policy Bank merger policy has kind of been the same for a while but there's a big question right now to what extent does a big merged firm including regional banks What could that cause a threat to financial stability if it failed We saw how many of those large institutions needed bailouts the last time And I think all the regulators want to prevent that again We also want to make sure that rural areas are in deserts and that mergers don't lead to mass closures We want to make sure people have a lot of choices And sometimes we're seeing across the economy how concentration may be limiting the ability for consumers to have choice and frankly monopolization can bully out the next great idea The markets have not particularly liked 2022 so far And you take last week was really brutal for a lot of investors as a practical matter Inflation is driving it to tightening fiscal monetary policy is running Where does it show up in terms of consumer credit Because I see some reports of people are putting up more and more in their credit card balances That's right During the pandemic credit card debt outstanding actually went down quite a bit People were paying down their balances And then in late 2021 it started coming up again And actually quite sharply I don't actually think that that's fully driven by inflation I think that's just people are getting higher wages spending more and there's a lot of pent up demand So we're watching that pretty closely We want to make sure that people can shop get good rates but I do expect it to continue to go up Of course inflation for many households It's really pinching them especially if.

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