Fed’s Williams: It’s still early days on questions involving stablecoins
New York Fed President John Williams is out with some comments on stablecoins and crypto:
- Stablecoins are more about payments as opposed to stores of value
- Doesn’t see rising financial stability risks from stablecoins
- Doesn’t know yet how stablecoins will impact demand for reserves
- Fed’s ample reserves system is designed to be flexible, can respond to stablecoin impact
Once again, Tether is one of the all-time great busienss models. You hold billions in US dollars, put them into Treasuries and collect the coupons while paying out zero per cent in interest. It’s risk free and infinitely scaleable. Everyone is now after that same sort of thing in every currency around the world.
Meanwhile, bitcoin is holding its ground around $60K despite Strategy’s Michael Saylor selling and really gumming the whole thing up. Itw as last up $722 to $62.769.
Now onto monetary policy:
- Fed is actively debating scenarios around inflation
- Fed Minutes captured a 'collective reaction function’
- AI investment is a driver of inflation
- In the longer run, AI investment will be a positive supply shock
- Base case is a broader US of AI that boosts productivity
- We will get inflation back to 2%
- Open to debate about Fed communications
- Transparency has served the Fed very well
- Standing repo facility should be business as usual
This article was written by flc97fe4880a4b454993821fe0b770a597 at investinglive.com.