US Federal Reserve rebuked crypto market for “extreme volatility”
A member of the Board of Directors of the US Federal Reserve System on Tuesday criticized bitcoin and other cryptocurrencies for their “extreme volatility”, but made it clear that the new class of financial assets does not pose a threat to the stability of the US economy. Writes about this CoinDesk.
“One area that the Federal Reserve is monitoring is the extreme volatility seen in some cryptocurrencies. For example, in 2017, the bitcoin rate rose by 1000%, and in recent months has fallen sharply, “said Layle Brainard, who is also on the Fed’s Interest Rate Committee..
Cryptocurrency markets “can raise important issues of protecting investors and consumers, and some of them are particularly vulnerable to money laundering,” she said. Brainard also warned investors about the “potential losses and pitfalls associated with this investment.”.
On the other hand, Brainard stated that cryptocurrencies are unlikely to “pose a threat to financial stability” as these assets are not a common means of payment and there is little evidence at this point that investors are borrowing large amounts of money to invest in cryptocurrencies..
According to CoinDesk’s report on the state of the blockchain industry, only 19% of respondents borrowed funds to buy cryptocurrencies, and more than half of them have already paid off their debt..
Brainard also noted that in the future the Federal Reserve will pay more attention to cryptocurrencies: “Our assessment of these markets is limited by their transparency. But we, nevertheless, will continue to study them anyway “.
The bulk of Brainard’s remarks fell on traditional classes of financial assets, where prices, in her opinion, can be “especially susceptible to unexpected situations” such as accelerating inflation. She generally assessed the risks of financial stability as “moderate” – in connection with the financial reforms introduced after the 2008 crisis.