Fed chair Jerome Powell called for stablecoin legislation in an interview with Cato President Peter Goettler on Thursday. During the interview organized by the libertarian think tank Cato Institute, Powell said that payment stablecoins lacking a regulatory framework pose a serious concern if they are to play a role in the existing financial system.
The Fed chair added that transforming money into yet another consumer product doesn’t make sense. In his view, if it is meant to be used as a form of money, it should be subject to regulation.
He clarified that the call for regulation isn’t a stand against any appropriate innovations of this variety. Instead, regulation should help stablecoins provide clarity and transparency to customers as they act as reserves of high-quality liquid assets, he said.
A stablecoin bill has been long awaited now. Earlier attempts to push a bill on stablecoins haven’t been successful due to speculation about the future of the collateral-backed crypto assets. One such unsuccessful attempt to release a draft text of stablecoin legislation was made in July 2022.
During the interview, Powell also spilled beans on the possibility of a Central Bank Digital Currency (CBDC) for the US. For a digital dollar to see the light of day, both the executive branch and Congress would need to support the idea—ideally in the form of a law, he said.
