Federal Reserve chief Janet Yellen recently revealed that the central bank is closely looking at the latest developments in the blockchain and fintech space.
Speaking at the Commonwealth Club, San Francisco, California on January 18, Yellen made the remarks during the Q&A round which followed her speech on “The Goals of Monetary Policy and How We Pursue Them”.
Yellen said that blockchain is “a technology that enables transactions and ownership of things to be taken care of automatically, without a need, for example, for a trusted central party to record transactions. So, it is very important new technology that could have implications for the way in which transactions are handled throughout the financial system.
"We’re looking at it in terms of its promise in some of the technologies that we use ourselves and many financial institutions are looking at it. It could make a big difference to the way in which transactions are cleared and settled in the global economy.”
Further, she said that the Fed recognizes the threat of cybersecurity. Yellen clarified that while there have been some incidents on the central bank’s public facing website, no such breach has ever happened on the Fed’s core network.
When asked about implications of cashless economy, Yellen said:
“The demand and use of cash continues to increase, but there are many important innovations taking place in the payment space. Fintech innovations that I think are very exciting in terms of resulting in faster, safer payments not only at the wholesale but also at the retail level that could change the use of cash overtime…We are monitoring those developments very carefully.
“We want to make sure that useful and welfare enhancing innovations can take place in way that we do not stifle them, yet we also want to make sure that consumers are well protected”.
