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Fed Chairman Supports Private Crypto Transactions

Fed Chairman Supports Private Crypto Transactions

Fed Chairman Jerome Powell has spoken in favor of private Crypto transactions in his recent comments to the House Financial Services Committee. He also argued that the government has no interest in knowing everyone’s payments. It wouldn’t be particularly interesting in the context of the United States.

12 February, 2020 | AtoZ Markets – Fed Chairman Jerome Powell testified before the House Financial Services Committee this morning on the state of the economy and monetary policy in the US. During his testimony, President Powell recognized the need for privacy and private crypto transactions. As Anthony Pompliano, founding partner of Morgan Creek Capital Management noted that sentiment has turned into a bullish feeling on social media, following the testimony of Fed Chairman. 

Widespread Crypto Adoption in the US

Fed Chairman spoke on various crypto-related topics, including Facebook’s Libra and the implications of libra could have on monetary policy. Federal Reserve Chairman Jerome Powell told that “we are working hard on this.” The end goal is to one day digitize the dollar, which has been accelerated since the debates on Facebook’s Libra plans.  He also discussed the recent injections of liquidity in the repo market and its volatility.

Fed Chairman also supports private crypto transactions, such as those offered by Aztec, Monero and Z-cash etc. The Chairman admitted that a fully transparent system is not ideal for the US economy. Everyone can see everyone else’s financial transactions and balances in the transparent system.

US Treasury Secretary Steven Mnuchin warned journalists that cryptocurrencies “operate in the shadows”. He said in a statement in July:

Cryptocurrencies like Bitcoin have been exploited to support billions of dollars in illicit activities. Those are like cybercrime, tax evasion, extortion, ransoms, illegal drugs and human trafficking.

After these comments, many assumed that anonymous cryptocurrency transactions would soon be subject to a significant crackdown by the US government. However, Powell’s comments may suggest a possible shift in policy.

Read More: PlusToken May Drop Bitcoin Price Temporarily by Dumping

The Interest and Inflation Rates

Powell said that the Fed’s 2% inflation target is lower than what is currently desired. Furthermore, the Fed’s monetary policy aims to reach 2%.

Powell said that “for 25 years we have been in low-interest rates, which may negatively affect the ability to stimulate the economy during a downturn.” If the economy weakens and we have low-interest rates, fiscal policy may have to intervene and help the Fed to stimulate the economy. The Fed is also seeking to transition from the current repo operations.

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Disclaimer: The views and opinions expressed in this article are solely those of the author and do not reflect the official policy or position of AtoZ Markets.com, nor should they be attributed to AtoZMarkets.

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