Federal Reserve press conference, 2017-12-13 — Chair Janet Yellen

Question (Justine Underhill, Yahoo Finance): Justine Underhill, Yahoo Finance. So William Dudley of the New York Fed recently said that the Fed is exploring the idea of potentially having its own cryptocurrency or digital currency. What use do you see a cryptocurrency could have for the Fed, and do you see the potential of a cryptocurrency that might be considered legal tender?
Answer: So I want to distinguish carefully between digital currency and cryptocurrency. This is—there is a discussion going on among central bankers about the potential merits of adopting—a central bank itself adopting a digital currency. And there might even be a central banker or two around the globe that might go in that direction. But I really want to caution that this is not something the Federal Reserve is seriously considering at this stage while we’re looking at research on this topic. There are, I think, to my mind, limited benefits from introducing it, a limited need for it, and some substantial concerns. And so I would really doubt that the Federal Reserve would soon go in that direction. But it is something that central banks are looking at to see if there could be benefits from doing it.

Question (Craig Torres, Bloomberg): Chair Yellen, before I ask this question, thanks for your stewardship of the economy, the benefits of which I’ve seen in some of the harder-hit parts of my own family, so— Your tenure. We’ve seen six Federal Reserve presidents appointed. One was a woman and five are men, so I’d like to know how that comports with your commitment to gender diversity. And, second, I wonder if you think this process of appointing Reserve Bank presidents needs to be more transparent and accountable. Recently, the Richmond Fed board took 11 months, and they came up with a candidate who was another Fed board member. And so I’m wondering what you would say to critics who say that looks like cronyism, and if you think, you know, this could be simply a more open process. These are votes on national monetary policy, after all.
Answer: So I would agree with you that these are important appointments. Under the Federal Reserve Act, the nonbanking directors of the Reserve Banks have responsibility for conducting a search, and the Board of Governors has to sign off on the candidates. We’ve made very clear and we monitor ongoing searches very carefully to make sure that absolutely every effort is made to create a pool that is diverse, and that there be a national search, and that every attempt should be made to create a diverse pool. At the end of the day, we cannot guarantee that the outcomes of these searches will result in an increase in diversity. I mean, I’ve been very pleased to see that there’s been some success in that regard, but we have signed off on the individuals who were appointed and have held the view that these are individuals who were qualified to serve in these positions. So I would hope—I would hope to see greater diversity. It has been a challenge to achieve that.

Question (Nancy Marshall-Genzer, Marketplace): Nancy Marshall-Genzer with Marketplace. I’m wondering if you have any advice for incoming Chair Powell?
Answer: Well, my colleague—I’ve had the pleasure of working with him now for many years, and he is somebody who understands the Federal Reserve very well and shares its values. And as I mentioned in my opening statement, he is committed to the mission of the Fed; to its independence; and to its acting in a nonpartisan, nonpolitical way. He is somebody who has participated in the FOMC now for many years. To the best of my knowledge, he has been part of the consensus. I don’t believe he’s ever dissented. I think there is strong consensus in the Committee for the gradual approach that we have been pursuing, and Governor Powell has been part of that consensus, so I feel he’s very well positioned and very knowledgeable of all the ins and outs of everything that the Fed does. In supervision, in the payment system—he’s played an active role there—and in monetary policy, and I have confidence that he is very capable of steering the Federal Reserve in the years ahead.