The U.S. Federal Reserve singled out a dramatic rise in the price of cryptocurrencies in its overall assestment of the stability of the financial system, according to Bloomberg, which said it’s the first time the central has ever done so.
The U.S. central bank, it its semi-annual Monetary Policy Report, told Congress “the surge in the prices of a variety of crypto-assets” reflects investors’ increased risk appetite. While officials within the Fed have discussed crypto before, the institution itself has seldom if ever used the asset class as a benchmark to consider broader market conditions.
Small shifts point to the Fed giving crypto a closer look. Top brass have met with key industry figures in recent months as they prepare to tackle more systemic crypto-adjacent questions, such as how to proceed on a digital dollar project.
Even so, one small shoutout does not a sea-change make. The 69-page report declined to further elaborate on crypto assets, their resiliency, prospects or impact on monetary policy. It bundled the mention within a broader section on the price of “risky assets,” sandwiched between housing prices and treasury yields.
“Asset prices may be subject to significant declines should investor risk appetite fall, interest rates rise unexpectedly or the recovery stall,” the section ended.