The Federal Reserve governor discussed cryptocurrencies and a digital dollar at Consensus 2021.
"Prior to this meeting, Vice Chair Quarles, Chair McWilliams and I had talked about potentially putting together an interagency policy sprint team just on crypto because of exactly the concerns you've described," Hsu said.
The potential launch of private cryptocurrencies such as the Facebook-backed Diem is motivating central banks to develop CBDCs, the report noted.
Last year, Federal Reserve Governor Lael Brainard announced the Boston branch of the U.S. central bank was exploring a digital dollar. She’ll be speaking next week at Consensus.
Mounting debts and inflation fears could leave central banks hamstrung in the years ahead, leading to the debasement of fiat currencies.
The Colonial Pipeline saga illustrates what may be a vulnerability with digital currency issued by central banks.
Nearly all major components of the CPI increased in April, a sign that pent-up demand is fueling a rebound in economic mobility.
Gary Gensler said Congress should provide clarity around crypto exchange regulation. A 2020 bill sought to do just that.
The Fed's own staffers didn't mention cryptocurrencies as a risk to financial stability, but market participants did.
The guidelines would have a direct bearing on Wyoming special purpose depository institutions that want access to Fed payments, said U.S. Sen. Cynthia Lummis.
"Rate hikes are not something I'm predicting or recommending," Yellen later said.
Signs point to a new avenue of growth for crypto-backed lending.
"You are seeing things in the capital markets that are a bit frothy, that's a fact," said Powell. "I won't say it has nothing to do with monetary policy."
The Federal Reserve kept monetary policy unchanged and sees inflation as temporary, which is closely watched by bitcoin investors.
Analysts expect the Fed to maintain its pro-easing bias.