The Fed Governor claims that it won’t stop focusing on cryptocurrencies since it doesn’t want to stifle innovation

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Although cryptocurrency operations “may pose considerable hazards,” according to Federal Reserve Governor Michelle Bowman, the Fed does not want to “hinder innovation.” “By stifling innovation, we could be driving growth in this area towards the non-bank sector, leading to far less transparency and potentially increasing the danger to financial stability,” she continued.

At a Florida Bankers Association Leadership event in Miami on Tuesday, Michelle Bowman, a member of the Board of Governors of the Federal Reserve System, discussed cryptocurrencies, the American economy, and the Fed’s efforts to reduce inflation.

The Fed governor commented on the demise of cryptocurrency exchange FTX and other recent crypto-related incidents, saying that “these events have made it evident that cryptocurrency activities might pose considerable dangers to individuals, firms, and potentially the larger financial system.”

Bowman emphasized: The Fed and other banking institutions will continue to concentrate on this sector, in view of the serious risks these activities may bring, noting that she anticipates some banks to continue investigating “how to engage in crypto-related activity.”

“By stifling innovation, we could be pushing this industry’s expansion towards the non-bank sector, which would result in far less transparency and a possible risk to financial stability.

Governor Bowman made the following statement in regards to the Federal Reserve’s fight against inflation: “I have supported the Federal Open Market Committee’s (FOMC) policy steps to address excessive inflation during the last year.”

The FOMC has tightened monetary policy since last March, according to the Fed governor, “via a combination of hiking the federal funds rate by 4-1/4 percentage points and lowering our balance sheet holdings.”

I anticipate the FOMC will keep raising interest rates to tighten monetary policy since we still have a lot of work to do.

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