Fed Chairman Jerome Powell stated that the Fed is seriously focused on bringing inflation down to 2 percent.
Fed Chairman Jerome Powell continues his messages on the fight against inflation.
Powell spoke at the opening of the conference titled “International Roles of the US Dollar”.
Pointing out that the global supremacy of the dollar is supported by the depth and liquidity of the US financial markets, the size, strength, stability and openness of the country’s economy to trade and capital flows, and international confidence in US institutions and the rule of law, Powell explained that the international role of the dollar provides multiple benefits.
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Powell noted that the dollar’s international role reduces the transaction fees and borrowing costs of households, businesses and the government for the US, and that its prevalence helps to control uncertainty and, accordingly, the cost of hedging for local households and businesses.
For foreign economies, Fed Chairman Powell noted that the widespread use of the dollar allows borrowers to access a large pool of lenders and investors, which reduces funding and transaction costs.
Stating that the Fed’s strong commitment to the goal of price stability contributed to the widespread confidence in the dollar, Powell said, “To that end, my colleagues and I remain focused on returning inflation to our 2 percent target.”
“THE GLOBAL MONETARY SYSTEM IS UNDERGOING RAPID CHANGES THAT COULD AFFECT THE ROLE OF THE DOLLAR”
Powell emphasized that the Fed’s commitment to its dual objectives and price stability encourages the international community to hold and use dollars.
“Looking to the future, there are rapid changes in the global monetary system that could affect the future international role of the dollar,” Fed Chairman Powell said.
Pointing out that in light of the tremendous growth in crypto assets and stablecoins, the Fed is evaluating whether a central bank digital currency (CBDC) can be developed in a secure and efficient domestic payment system, Powell said, “As noted in the Fed’s report on this topic, a US Federal Reserve Digital Currency could potentially help preserve the dollar’s international position.”
Powell said they are also considering how the global financial system might evolve over the next 5 to 10 years, emphasizing the importance of the dollar for the US, global economies and financial markets.
