A highly speculative asset, inefficient for transactions and also used for illegal purposes. This is what Janet Yellen, 74, defines Bitcoin as the first woman to lead the US Treasury, after being the first woman to chair the Federal Reserve, the US central bank. And his tranchant judgment was enough to sink the crypto-currency, which dropped to $ 47,400, down by more than 17% after the new records reached over the weekend at $ 58,532. I don’t think Bitcoin is widely used as a transaction mechanism. an extremely inefficient way of conducting transactions and the amount of energy that is consumed in processing those transactions is staggering, said Yellen, speaking at the conference organized by the New York Times.
The former banker opens up instead to the digital dollar: backed by the Federal Reserve and based on a blockchain, it could lead to faster, safer and cheaper payments, says the economist. Although first there are important questions to be resolved: What would be the impact on the banking system? Would it cause a huge movement of deposits out of banks and into the Fed? Would the Fed deal with retail clients or would it try to do it wholesale? Are there any concerns about financial stability? How would we handle money laundering and illicit finance problems? There are a lot of things to consider here, but they’re worth looking into, Yellen explained. These are the issues that the ECB is also considering, after closing the popular consultation, before giving the green light to the digital euro.
Yellen takes advantage of public intervention for the new 1.9 trillion aid package under discussion in Congress. He knows that it is a fundamental task for a secretary of the treasury to ensure that our country is on a sound fiscal course. But if you don’t spend what it takes to get the economy back on track quickly, that too has a fiscal cost, he said. Because, if the level of US debt is much higher than that reached during the financial crisis of 2008, due to lower interest rates, the share of interest payments, as a share of GDP, is more or less the same today. So we have more fiscal space than before and we should consider using it. Success, for her, would be returning to pre-pandemic unemployment levels and seeing the re-employment of those who lost their jobs in the service sector in particular.
The other environmental challenge. Yellen announced yesterday that he plans to create a center within the Treasury Department to review fiscal policy incentives and financial stability risks related to climate change and will appoint a senior official to lead the review. a way to introduce the topic of environmental stress testing for banks. While they probably would not impose capital requirements, nor would they limit dividend payments as is the case with the current Fed stress tests.
The world is moving in this direction. The Bank of England will launch the first climate stress test for the financial services sector next June, based on 3 different climate scenarios. A prospect that also appeals to the president of the ECB, Christine Lagarde, determined to do her part against climate change.