Key Takeaways:
- Janet Yellen talks about digital assets and their prospects.
- She expects the residents to work with the government to bring forth responsible innovation.
On April 7, Janet L. Yellen, the secretary of the Treasury Janet L. Yellen, the Secretary of the Treasury, shared her views on digital asset policy, innovation, and regulation and discussed the Biden Administration’s approach to digital assets at American University’s Kogod School of Business Center for Innovation.
She opened her speech by acknowledging the growth and impact of digital assets and mentioned that though they are “relatively new” they have become a part of the larger trend which is “the digitalization of finance.” Yellen said that this development of new technology has made people less reliable on centralized arbitrators like banks and other financial companies. However, she also mentions the key problem here which is preventing the same assets to be spent twice.
The secretary then went on to discuss the five lessons as technologies are evolving. The lessons were based on “the nature of responsible innovation, the structure of appropriate guardrails, the fundamentals of the financial system, our role in the global economy, and the value of collaboration.”
At first, she talked about how the growth of the financial system depends on responsible innovation. The suggestion of introducing a Central Bank Digital Currency was considered and she said that it can become a type of trusted money as compared to the conventional cash and at the same time can also offer “some of the projected benefits of digital assets.”
It was also mentioned that the administration will publish a report discussing the prospects of money and payments, and an analysis of probable design choices if CBDC is introduced.
Yellen then talked about the Global Financial Crisis and how it happened as regulation could not match the patch of innovation. She said that regulations should be decided according to the risks involved and the daily activities that happen in the market and not on any technology. She said, “Sovereign money is the core of a well-functioning financial system, and the US benefits from the central role the dollar and US financial institutions play in global finance.”
Janet Yellen ended her speech by saying that to make a responsible innovation happen everyone should work together. She said, “Many of the most groundbreaking innovations in our history have involved all of us: policymakers and businesspeople, advocates, scholars, inventors, and citizens.” The secretary is expecting the government to make innovations that will serve Americans, the nation, and the planet by learning from the mistakes that have happened earlier.
