A Federal Reserve governor is pushing for new laws to let banks create and manage stablecoins – digital currencies pegged to the US dollar.
Stablecoins: Good and Bad
Governor Christopher Waller believes stablecoins could be great for the financial system. He sees them boosting access to US dollars, making international payments easier, and improving everyday transactions. However, he also acknowledges the risks. Stablecoins could lose their dollar peg, leading to instability. Like any financial system, they’re vulnerable to failure and runs.
Regulation is Key
Waller’s proposal focuses on a strong regulatory framework. This framework should allow both banks and non-bank companies to issue stablecoins, but with careful consideration of how the rules might affect other payment methods. He emphasizes the need for a clear regulatory regime to ensure safety and soundness.
A Bill Already in the Works
Interestingly, Senator Bill Hagerty recently introduced the GENIUS Act, a bill aimed at regulating stablecoins, setting licensing standards, and establishing reserve requirements for companies that issue them. This shows that the push for stablecoin regulation is gaining momentum.
