Fed's Powell Says Public Should Understand Risks of Bitcoin
Fed Reserve chair Jerome Powell said on Monday that the US public needs to understand the risks behind Bitcoin and other crypto currencies even as the central bank itself studies the potential costs and benefits of a digital dollar of Powell said the Fed is conducting research through an in house technology lab and collaborating with M I T to study if the public wants or needs a digital currency, but the risk to individuals That is significant, according to pal. Or work on CBD sees is not primarily motivated, Aided by the appearance on the scene of crypto currencies and stable coins, it really is fundamentally technology has made it possible for us to offer a new form of trusted money and that sovereign anchor that has been so important for economic development for a very long time. And we're looking carefully at whether to do that. So turning your question crypto assets which we call him, Chris Crypto assets, You know, they're they're highly volatile. See Bitcoin. And therefore not really useful is a store of value and they're not backed by anything. They're more of an asset for speculation, so they're also not particularly in use as a means of payment. It's more a speculative asset that Z essentially a substitute for gold rather than for the dollar. And I think with crypto assets of the Publicly still understand the risks. The principal thing is there's the volatility is also the outsized energy requirements requirement for for mining on the fact that they're not backed by anything which I which I mentioned. Turning to stable coins so to the extent of stable corners back by sovereign currencies of leading nations. That's certainly an improvement over crypto assets, I would say, but nonetheless. Where is the credibility Come from? It comes from that sovereign currency that is the backstop. You know, the thing is existing sovereign currencies are issued with the benefit of the public in mind that potentially fast and wide adoption of a global stable coin. Potentially a global currency, governed only by the incentives or private company is something that will deserve and will receive. Highest level of regulatory expectations. Um so and his regulation where it needs to be on global stable coins yet it's not, but we're making progress. Nonetheless, stable coins may have a role to play with appropriate regulation, but that role will not be to form the basis of a new global monetary system. Um, private, stable coins. They're not gonna be inappropriate Substitute for a sound monetary system based in central bank money, Bitcoin has soared nearly tenfold and value compared with a year ago, hovering around 57,000 on Monday. Meanwhile, Tesla has said that it was buying 1.5 billion worth of Bitcoin and with soon start accepting Bitcoin payments of four cars.