The US Treasury Secretary Janet Yellen shared her thoughts on the recent correction in the value of US dollar-pegged stable coins.
Since Monday of this week, TerraForm Labs’ UST & Luna coins have faced huge corrections in their values. In particular, UST stable coin slipped to a $0.2 value due to the high-pressure sell situation. On the last day, USDT, a stable coin by Tether company, touched a $0.96 value. These things were enough to drag the issues associated with the crypto market, by the critics.
On 12 May, Speaking at the hearing of the House Financial Services Committee on the Financial Stability Oversight Council’s Annual Report to Congress, Janet Yellen, the United States Treasury Secretary, indirectly hinted that the crypto market is currently not standing at that size where the downfall in the dollar-pegged values of stablecoins may result into any financial stability risk to the country.
Janet also claimed that the rapid rate of growth and this critical situation for them is not a new thing, because the agency saw such types of examples in the past 100s years.
“They’re growing very rapidly,” said Yellen, referring to digital assets. “They present the same kind of risks that we have known for centuries in connection with bank runs.”
Contrary to the stablecoins concept, Janet appreciated the concept of Central Bank Digital Currency (CBDCs) or say Digital Dollar. She said that CBDC could bring “a very significant impact on the structure of financial intermediation”.
However, Janet Yellen believes that there are some possible risks associated with CBDC but those risks are very small over the issues associated with Stable Coins.
Earlier this, the US Treasury Secretary stated on Tuesday of this week that lawmakers needed to introduce some “consistent Federal Framework ” on stablecoins issuer companies to ensure the safety of users to keep the risks away.