The current Federal Reserve Chairperson Janet Yellen has some statements that she wants to shout out before leaving her Federal seat.
Janet Yellen became the Federal Reserve Chairperson in February of 2014 and has led until now, leading strongly and to the approval of many. Her term is ending and she will be leaving her position by the next February.
She will be leaving with an impressive record. Unemployment in the United States is low, sitting at 4.1%, and if she were to keep this level of unemployment, she would be leaving office with one of best records in this matter. This may be due to a variety of factors, such as more people leaving the job market and sitting on the sidelines, hence not being counted in the numbers of the unemployed. Yet, she was a strong proponent of keeping inflation stable and making sure that there was enough employment. She made certain to create a dashboard that outlined metrics that she believed should be accounted for and measured.
A big metric many were watching for was that of wage growth, which has not increased over the course of her tenure. She made certain to cover these aspects in a recent press conference that was held discussing interest rate hikes (which are going from 1.25 to 1.50%) and other matters such as bitcoin (read a full transcript here).
She’s applauded the virtual currency in the past, saying that it was a payment innovation, taking place entirely outside the banking industry.
In a recent testimony before Congress, she was slightly overshadowed by a man holding up a buy bitcoin sign, and this may have had some impact on her recent statements.
In this last press conference, she’s stated that:
“I would simply say that bitcoin, at this time plays a very small role in the payments system, it is not a stable store of value and it doesn’t constitute legal form of tender, it is a highly speculative asset, and the fed doesn’t really play any regulatory role with respect to bitcoin other than assuring that banking organizations are attentive and managing interactions with participants in that market.”
When asked about a directive to banks, she referred to anti-money laundering and bank secrecy acts and nothing else, in particular, was needed at this time.
She is not really concerned with the aftermath of a potential bubble because she thinks that only a specific few would be affected. Those who are likely to be affected would be those that are heavily invested in it, thus having the potential to lose large sums, if a bubble were to occur. She also doesn’t think that bitcoin would affect the larger market in general, as large banks don’t have huge ties to the virtual currency. She’s also noted that the fed will not be issuing their own version of a cryptocurrency for the present moment.
“Undoubtedly there are individuals who could lose a lot of money if bitcoin were to fall in price, but I really don’t see that as creating a full blow financial stability risk,” she said. “I really don’t see any significant exposure of our core financial institutions to threats from bitcoin if its value were to fluctuate.”
At the same time, contrary to statements made by Goldman Sachs about the market, Yellen doesn’t believe that there are any issues with how the market is valued and doesn’t believe that there is a bubble in the stock market.
“We have in recent months characterized the general level of asset valuations as elevated, the fact that those valuations are high doesn’t mean that they are necessarily overvalued.”