Janet Yellen: US Treasury Secretary again with a crypto-critical statement
Februar 24, 2021
The new US Treasury Secretary Yellen has not exactly earned a reputation as a crypto enthusiast in her previous position as Fed President. Now she points out grievances again at an event of the New York Times, but also makes some contradicting statements.
Janet Yellen is the first woman to head the US Treasury
Since the lack of regulation of the crypto market in the USA is denounced by many, their attitude to this topic has of course come into focus. Her statements from the past indicated that she was rather skeptical about the successes of Bitcoin & Co.
Janet Yellen recently reiterated this rather critical point of view at a New York Times event . They cannot imagine that Bitcoin Pro will manage to become a „widespread transaction mechanism“. The interview on the occasion of DealBook / DC Policy Project has the New York Times now been published .
„It’s an extremely inefficient way to conduct transactions and the amount of energy that goes into processing those transactions is shocking.“
That’s their wording. However, Yellen did not specify exactly where she sees the “inefficiency”. This statement is all the more surprising given that when she was sworn in as minister, Yellen stated that Bitcoin and other cryptocurrencies offer “potential advantages for the US and its allies” and “improve the efficiency of the financial system” (see p. 96 on the linked) Source).
Yellen hints at CBDC considerations
As emphasized several times before, the US Treasury Secretary does not fundamentally reject digital currencies. Central bank digital money (CBDC) continues to be an issue for the US Federal Reserve. In this area, however, there are “still many unanswered questions”. These included, for example, the effects on monetary policy and the interaction of the Federal Reserve with private investors.
What would be the implications for the banking system? Would it cause a huge movement of bank deposits into the Fed? Would the Fed negotiate with retail customers or try to do so on a wholesale level? Are there any concerns about financial stability? How would we deal with money laundering and illegal funding issues? There are a lot of things to consider here, but it’s worth looking into.
Janet Yellen is moving in a similar way to the President of the European Central Bank (ECB) Christine Lagarde . She also took note of the very strong increase in private investors‘ interest in crypto values. What conclusions the ECB intends to draw from this remained open at first. In any case, buying bitcoin reserves is not an option for the ECB.