Cleveland Federal Reserve Bank President Loretta Mester recently touched upon Bitcoin and stablecoins during her speech on the modernization of the U.S. payments system.
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Mester mentioned that Bitcoin failed to serve as a means of faster payments because it is too slow. Since it it is very volatile, it is primarily used for price speculations.
“Its value is volatile, driven by speculation in the currency, making it less useful as a unit of account. Its settlement time has been too slow to make it practical for mainstream payments.”
She also pointed to the fact that it is more expensive to operate than fiat currencies.
Meanwhile, stablecoins that are pegged to traditional assets face regulatory roadblocks. Mester mentions that there is no regulatory clarity in different jurisdictions.
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Despite adopting a skeptical attitude to cryptocurrencies, she did concede that such new technologies highlight the public’s expectations for better means of payment. Hence, the Federal Reserve will continue working on modernizing its financial system.
As reported by U.Today, U.S. Federal Reserve Chairman Jerome Powell recently said that they needed to evaluate the costs and benefits of central bank digital dollars before moving forward with a digital dollar.