“Cryptocurrency activity can pose significant risks,” said Federal Reserve Board member Michelle Bowman. The Fed doesn’t want to “stop innovation.” She added:Stifling innovation could push growth in this sector into the non-bank sector, significantly reducing transparency and leading to potential financial stability risks. ”
Fed President on Cryptocurrencies, US Economy and Inflation
Federal Reserve Board member Michelle Bowman spoke at the Florida Bankers Association leadership event in Miami on Tuesday about cryptocurrencies, the U.S. economy, and the Fed’s efforts to keep inflation down.
Regarding the collapse of crypto exchange FTX and other recent events in the crypto industry, the Fed Governor said:
Bowman noted that he expects some banks to continue to explore “how to get involved in crypto-related activities,” emphasizing:
The Fed and other banking institutions will continue to focus on this area in light of the significant risks these activities can pose. But the bottom line is that we don’t want to stifle innovation.
“As regulators, we need to support innovation and recognize that the banking industry must evolve to meet consumer demand,” the Fed President continued.
“By stifling innovation, we could push growth in this sector into the non-bank sector, significantly reduce transparency, and lead to potential financial stability risks. I’m thinking about what the approach would be,” she opined.
Regarding the Federal Reserve’s fight against inflation, Bowman said he has supported policy actions by the Federal Open Market Committee (FOMC) to address the past year’s high inflation. “I am committed to taking further action to bring inflation back to our target,” she stressed.
The Fed’s governor explained that the FOMC has been tightening monetary policy since March last year, “combined with raising the federal funds rate by 4-1/4 percentage points and reducing balance sheet holdings.”
Noting that “we’ve seen a decline in some inflation indicators” in recent months, Bowman stressed:
We still have a lot of work to do, so we expect the FOMC to continue raising rates and tightening monetary policy.
What are your thoughts on Federal Reserve Board member Michelle Bowman’s statement about cryptocurrencies and the Federal Reserve’s efforts to curb inflation? Let us know in the comments section below.
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