A member of the U.S. Federal Reserve’s Board of Governors said that stablecoins can strengthen the financial system if the necessary safeguards are put in place to minimize risks.
Speaking at the Vienna Macroeconomics Workshop at the Institute of Advanced Studies, Christopher Waller, Member of the Fed’s Reserve Board of Governors, said that properly regulated stablecoins can improve the U.S. financial system.
Waller noted that stablecoins could reduce the need for intermediaries and lower global transaction costs. However, he also stressed that the government can’t yet guarantee the safety of stablecoins. Meanwhile, the assets can only reduce payment costs if the right regulatory mechanisms are in place. According to him, the proper restrictive measures will help minimize the risks of devaluation and illegal use of stablecoins.
Moreover, Waller said that decentralized finance (DeFi) can coexist with the traditional financial system without replacing it entirely. Dollar-pegged stablecoins can help strengthen the dominance of the U.S. national currency on the world stage. His opinion is shared by some officials and representatives of the crypto market. Denelle Dixon, CEO of the Stellar Development Foundation, previously expressed a similar thought, calling on officials to bring clarity to the regulation of the stablecoin market. Paul Ryan, ex-Speaker of the U.S. House of Representatives, also argued that stablecoins could contribute to demand for U.S. Treasury bonds, helping to maintain the dollar’s status as the world’s reserve currency.
U.S. Senator Bill Hagerty recently introduced a bill in the U.S. House of Representatives to regulate stablecoin issuers in order to increase transparency and security in the use of stablecoins in the country. Meanwhile, the latest Chainalysis report showed a decline in stablecoin user activity in the U.S.
