Fed's Powell reiterates call for appropriate regulation of digital finance

BY Reuters | ECONOMIC | 09/27/22 03:47 PM EDT

(Reuters) - Digital financial assets require appropriate regulations to ensure a level playing field and protect consumers, Federal Reserve Chair Jerome Powell said on Tuesday.

"Within the decentralized finance ecosystem there are these very significant structural issues around the lack of transparency," Powell said during a panel discussion on digital finance organized by Banque de France.

"We need to be very careful about how crypto activities are taken within the regulatory perimeter...there's a real need for more appropriate regulation so that as decentralized finance expands and starts to touch more and more retail customers, appropriate regulation is in place...they need 'same risk, same regulation' wherever they take place."

He added that while stablecoins, a crypto asset that attempts to peg its value to a conventional currency such as the U.S. dollar, are quite different from unbacked crytpo assets, they too require careful monitoring.

"If you're going to have private money creation across the country, really there needs to be a federal role...we think it really should be the Fed that does play that role. That's our principal focus right now," Powell said.

(Reporting by Lindsay Dunsmuir; Editing by Chizu Nomiyama)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.