Federal Reserve Vice Chair Michelle Bowman suggested that central bank staff should be allowed to hold cryptocurrencies, citing direct experience as beneficial for market comprehension.
Proposed Change
During her speech at the Wyoming Blockchain Symposium, Michelle Bowman indicated that staff at the Fed should have the ability to own small amounts of cryptocurrency. She believes this would provide regulators with valuable insight into overseeing crypto-related activities. Currently, the Fed prohibits its staff from owning cryptocurrencies. "There's no replacement for experimenting and understanding how that ownership and transfer process flows," Bowman stated.
Cultural Change in Financial Regulation
Bowman urged regulators to move away from an overly cautious mindset regarding new technologies, including blockchain and artificial intelligence. "We must choose whether to embrace the change and help shape a framework that will be reliable and durable, or to stand still and allow new technology to bypass the traditional banking system altogether," she emphasized.
Risks and Benefits of New Technologies
Bowman acknowledged that technological changes come with certain risks but noted that they might be offset or deemed manageable when recognizing the extensive benefits new technologies can offer. She also expressed her intention to minimize the use of reputational risk as a regulatory measure, criticizing its application in suppressing legitimate business.
Michelle Bowman's proposals for allowing cryptocurrency ownership and changing the culture of financial regulation may be significant steps toward adapting to rapidly evolving technologies in the banking sector.
