Thread by @CaitlinLong_

MORE FED COMMENTS ABOUT #stablecoins. Watch this space--putting pieces together, Fed action is coming:
federalreserve.gov/newsevents/spe… #Consensus2021

"Depending on underlying arrangements, some may expose consumers and businesses to risk. If widely adopted, #stablecoins could serve as the basis of an alternative payments system oriented around new private forms of money."

"Given the network externalities associated w/ achieving scale in payments, there is a risk that the widespread use of private monies for consumer payments could fragment parts of the U.S. payment system in ways that impose burdens and raise costs for households and businesses."

"It is not obvious that new forms of private money that reference fiat currency, like #stablecoins, can carry the same level of protection as bank deposits or fiat currency."

"Altho various federal & state laws establish protections for users, nonbank issuers of priv money are not regulated to same extent as banks, value stored in these systems is not insured directly by FDIC, & consumers may be at risk that issuer will not be able to honor its liabs"

"New forms of private money may introduce counterparty risk into the payments system in new ways that could lead to consumer protection threats or, at large scale, broader financial stability risks."

LOTS of discussion of #CBDC & references to #FedNow as well.

This is a significant speech from the Fed. Take signals accordingly

oops -- I broke the thread:

https://twitter.com/CaitlinLong_/status/1396817113248063493?s=20

In Q&A, @mikejcasey asked Brainard abt #stablecoins. She answered by referring to #freebanking era--instability, bank runs that resulted in issuance of pubic money. More references to consumer protection & counterparty risk; consumers maintaining safe access to central bank money

"It's important for the regulatory environment to evolve."--Brainard

She then focused on risks--attacks on public blockchains, attacks on individual wallets; then referenced need for regulatory updates to incorporate these new types of risks

WOW, in "Fed-speak" this was a VERY direct speech. Again, take your market signals accordingly. /END