Hsu Urges Collaboration, Governance Efforts for Stablecoin, AI

In a statement today, Acting Comptroller Hsu confirmed his longstanding view that stablecoins require strong governance.  Adding AI to this list of innovations that also need policy attention, Mr. Hsu also urged private standard-setting efforts such as those undertaken by the Internet Engineering Task Force and the World Wide Web Consortium.

Study Finds Benefits to Central-Bank Reserve Sanctions

In a new research paper, the Federal Reserve Bank of Minneapolis’ staff concludes that seizing reserves in the course of economic sanctions is warranted in “high-risk” scenarios in which the cost to the sanctioning country resulting from a debt default by the sanctioned nation is lower than the cost of the actions being sanctioned.  This conclusion is derived from a simple economics model but it is of course very timely given ongoing debate about the extent to which central-bank reserves should be fully sanctioned as the Ukraine invasion continues and related geopolitical risks loom large.