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Hongji Feng
Hongji Feng
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Federal Reserve Chair Jerome Powell affirmed the central bank’s support for developing a regulatory framework around stablecoins during a Senate hearing on February 11.
According to the latest report by the Financial Times, Powell responded to questions from Indiana Senator Mark Warner about the future of stablecoins, suggesting their potential benefits for consumers and businesses.
Regulatory Clarity Needed for Stablecoin Integration, Says Powell
Powell stated that the Federal Reserve supports the creation of a regulatory framework for stablecoins, noting the importance of protecting consumers and savers.
He acknowledged that the future of stablecoins remains uncertain but noted their potential use by both consumers and businesses.
Powell stressed that developing a regulatory framework is necessary to ensure stablecoins function in a manner that aligns with financial protections.
“It is important for the development of stablecoins in, you know, a safe and sound manner—a manner that protects consumers and savers, and all—that there be a regulatory framework,” said Powell.
Interest Rates, Tariffs and Other Economic Factors
Powell also reiterated that the Federal Reserve is “in no hurry” to cut interest rates, despite expectations from some market participants.
“With our policy stance now significantly less restrictive than it had been and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance,” explained Powell.
He emphasized that officials are watching inflation closely and need further confirmation that it’s on track to reach the 2% target before considering any policy adjustments.
On the issue of tariffs, Powell maintained that the Federal Reserve does not set trade policies and refrained from speculating on their potential effects.
“It really does remain to be seen what tariff policies would be implemented. It would be unwise to speculate when we really don’t know. We see proposals, but it’s so hard to say what will happen,” said Powell.
He acknowledged other economic factors in addition to tariffs, such as immigration, fiscal policy, and regulatory changes, could influence the Fed’s future decisions.
Powell’s remarks reflect the Fed’s cautious but growing recognition of stablecoins, emphasizing the need for regulatory clarity to protect consumers and the financial system.
As lawmakers consider their next steps, the future of stablecoins and their integration into mainstream finance will depend as much on regulation as on technological advancements.
