Powell Clarifies CBDC/Merger Stance
Although much of today’s HFSC hearing with Chairman Powell was preoccupied by hot debate over the extent to which inflation is “transitory,” key financial-policy questions also surfaced for substantive discussion. CBDC and stablecoins were another major consideration; the Fed’s schedule for a CBDC consultation is now pushed to early September, with Mr. Powell today also saying that it will additionally focus on stablecoins and crypto. Although still noncommittal on a CBDC, the Fed chair also said that the risks posed by private stablecoins were perhaps the best argument for a fiat digital currency for the U.S. Asked about the President’s new competition policy (see Client Report MERGER6), Mr. Powell said simply that the Fed will continue to view mergers as it always has under law, not expressly challenging the White House’s plans but making clear that the Fed will retain its full independence in this critical arena.