US Treasury Secretary Janet Yellen said today that a central bank digital currency (CBDC) has significant advantages and disadvantages that must be carefully weighed before implementation, but may be a possibility for the United States in the future.
Yellen also spoke about the banking crisis in the country.
Yellen defended the role of the US dollar as the world’s reserve currency, saying that, given its widespread use and deep US asset markets, it is not easy for other countries to find a replacement currency.
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Yellen said bank lending rules were tightened a bit before bankruptcies and further tightening could be on the way. She said she doesn’t see anything serious enough to change her expectations for moderate growth, a healthy labor market, and easing inflation.
She stated that tightening bank loans could be an alternative to FED’s further rate hike.
The banking crisis in the United States began in early March 2023 when Silicon Valley Bank (SVB), the country’s 17th largest bank, went bankrupt and was seized by the Federal Deposit Insurance Corporation (FDIC) after an influx of deposits.
The collapse of the SVB was the second largest bank failure in US history and laid the groundwork for the worst banking crisis since the Great Recession. With total assets of over $200 billion at the end of 2022, the bank was a major lender to technology companies and crypto startups.
*Not investment advice.