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Fed Chair Powell testifies, NAFCU writes to HFSC
The Senate Banking Committee (SBC) held the first of two hearings for the Federal Reserve’s semiannual monetary policy report yesterday. During the hearing, Fed Chairman Jerome Powell reiterated the central bank’s goal of lowering inflation to 2 percent and noted that inflation pressures, such as housing and supply chain issues, remain an issue. However, Powell said consumer spending has increased this quarter and the labor market remains strong.
NAFCU Chief Economist and Vice President of Research Curt Long responded to Powell’s comments saying, “Where a 50-basis point hike in March was seen as an outside possibility prior to the hearing, it immediately became the odds-on outcome with the release of the hawkish remarks. Another strong jobs report on Friday would clinch a half percentage point move later this month.”
Powell also answered questions surrounding digital assets. Sen. Cynthia Lummis, R-Wyo., questioned whether stable coins, such as Bitcoin, have a place in the banking system. Powell remarked that there may be space for stablecoins in banking, but only if they have the same regulatory framework as other financial products. Of note, Lummis and House Financial Services Committee Chairman Patrick McHenry, R-N.C., recently wrote to Powell, and other banking regulators, noting “we should be encouraging prudentially regulated financial institutions, like banks and credit unions, to provide digital asset services precisely because they are subject to the highest standards of capital, liquidity, recovery and resolution, custody, cyber-security, and risk management.”
Powell will testify again today on the Fed’s monetary policy before the House Financial Services Committee (HFSC). NAFCU Vice President of Legislative Affairs Brad Thaler wrote to the HFSC ahead of the hearing to reiterate many of the association’s perspectives on the development of a central bank digital currency (CBDC), Reg II, and more.
NAFCU has advocated against the development of a CBDC, noting credit unions represent a superior and safer alternative for advancing financial inclusion goals and promoting affordable access to payments. Thaler also expressed the association’s concerns surrounding Regulation II. In the letter, Thaler explained that NAFCU has called for the Fed to delay the effective date of the rule, which would require debit card issuers to enable and allow merchants to choose from at least two unaffiliated networks for card-not-present transactions. The association has called attention to the costs associated with reissuing debit cards to comply with this rule.
NAFCU will continue to engage Congress, the Fed, and other regulatory agencies to ensure credit unions have a regulatory environment that fosters growth while maintaining the safety and soundness of the financial system.
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