Once again, the Fed Chair has given pretty caustic comments on the crypto sector. The Federal Reserve chair Jerome Powell was speaking at the sides lines of an event organized by Banque de France, the Central Bank of France, where he once again talked about the reliability and transparency of DeFi and the crypto sector.
The event “Which role for central banks?” under the stewardship of the Bank of France was initiated to deliberate on the tokenization of finance and the role that Central Banks will have in this exercise. The event was attended by Jerome Powell, the chairman of the Federal Reserve, and Christine Lagarde, the president of the World Bank.
Powell’s Opinion On CBDC
Fed Chair Powell is known for his hawkish stands, and his latest stark warning has not surprised the cryptocurrency community. Powell believes that the exercise of interest hike to effect monetary normalization has exposed the flaws inherent in the DeFi ecosystem.
Values of crypto assets ballooned during the pandemic when the Fed was into quantitative easing. This led to unrestrained inflation, which has reached the highest levels in the last four decades. Today the Fed is initiating stricter measures like hiking interest rates, which negatively affects the crypto sector.
Powell is a fan of Central Bank Digital Currency and feels that CBDC will enable the Central Banks to play a vital role in the era of cryptocurrencies. A similar view is held by European Central Bank President Christine Lagarde also, and he believes that central banks must have their own CBDC.
The idea of CBDC has been on the table for a long. Still, many experts loathe the existence of such a Digital currency since it goes against the concept of Decentralized Finance based on blockchain technology. Layah Heilpern, the writer of Undressing Bitcoin, calls it an unethical form of money. She believes that since CBDCs are programmable money, they can be misused by the central banks.
The idea of a Central Bank Digital Currency is highly controversial. There is no shortage of detractors like Neel Kashkari of Minnesota Fed, who feels there is no actual use of CBDC and that it could be used as a tool for mass surveillance.