Waller supports banks issuing stablecoins under framework

Federal Reserve Governor Christopher Waller has stated that stablecoins could broaden the use of the U.S. dollar and has advocated for a regulatory framework allowing both banks and non-banks to issue dollar-pegged digital currencies.

Speaking at a conference in San Francisco on February 12, Waller described stablecoins as an "important innovation for the crypto ecosystem" with the potential to improve retail and cross-border payments.

Waller stated that the stablecoin market has matured and "would benefit from a US regulatory and supervisory framework that addresses stablecoin risks directly, fully and narrowly," suggesting that both non-banks and banks should be permitted to issue stablecoins.

He expressed confidence in the private sector's ability to develop stablecoin solutions for businesses and consumers but emphasised the need for clear regulations to ensure a level playing field.

Waller acknowledged that stablecoins are currently used as a safe store of value in crypto trading, to access U.S. dollars in countries with high inflation, and for cross-border payments.

However, he noted that challenges remain, including the absence of a clear U.S. regulatory framework, fragmentation between state and international regulations, and the need for balanced regulation that promotes safety without hindering innovation.

He described stablecoins as "synthetic dollars" akin to commercial bank money, which "open up other payment possibilities."

Waller hopes that stablecoins' success will depend on their benefits to consumers and the broader economy.

He urged the private sector to develop innovative solutions while the public sector establishes clear legal and regulatory frameworks across states and national boundaries "to enable private sector innovation at a global scale."

Chairman Jerome Powell testified to Congress that he will not propose or pursue a digital dollar during the balance of his tenure at the central bank.

"The stablecoin market would benefit from a US regulatory and supervisory framework that addresses stablecoin risks directly, fully and narrowly,” Waller said.