Member of the Board of Directors of the Federal reserve system of the United States denounced bitcoin and other cryptocurrencies for their «extraordinary volatility,» but made clear that the new asset class does not create a threat to the stability of the U.S. economy.
Lael Brainard (Lael Brainard) said during his speech in new York on Tuesday:
«One area which is monitored by the Federal reserve – extraordinary volatility, demonstrated by some cryptocurrencies. For example, bitcoin increased by 1000 percent in 2017 and sharply lost value in recent months.»
She said that the cryptocurrency markets «may raise important issues for the protection of investors and consumers, and some of them can be used for money laundering». Brainard also warned investors about «the potential dangers of these investments and potential losses».
On the other hand, Brainard argues that cryptocurrencies are unlikely «to pose a threat to financial stability,» given that these assets are not normally used in ordinary payments, and that investors do not borrow large sums of money to invest in them. However, it is possible that Brainard does not know the real situation. A recent study
showed that 21% of students in the United States uses the loans to buy cryptocurrency.
Brainard noted that the Federal reserve will pay more attention to cryptocurrencies in the future:
«Our evaluation of these markets is limited by their opacity. However, we will continue to study them.»
In addition, Brainard spoke about the classes of traditional assets such as stocks and bonds. She said that their prices may be «particularly susceptible to unforeseen circumstances», such as the acceleration of inflation. However, she characterized the overall risks to financial stability as «moderate», due to the financial reforms undertaken after the crisis of 2008.
Members of the Federal reserve system has repeatedly expressed his opinion on the issue of cryptocurrencies. In March, fed chair Janet Yellen called
bitcoin is a «speculative asset», and after a couple of weeks later, Atlanta fed President urged
to refrain from investing in cryptocurrency.