Federal Reserve press conference, 2021-09-22 — Chair Jerome Powell

Question (Steve Liesman, CNBC): Thank you. Thank you, Mr. Chairman. I want to follow up on Jeanna’s question, the issue of ownership of these stocks and trades. Do you think it’s appropriate for Federal Reserve officials to be owning the same assets that the Federal Reserve is buying? Is that one of the modifications that you’re looking at? And in that these—you said yourself, they’re clearly not seen as appropriate. In that the Fed’s code of conduct says Fed officials should avoid even the appearance of the, of conflict, do those trades, in fact—and holdings—violate the Fed’s code of conduct? Finally, do you have a timeline as to when you might get—be done with your review? Thank you, sir.
Answer: Don’t have a timeline yet; we can start with that. So, well, let me address the muni question, since that’s in there. You know, I personally owned municipal securities for many, many years, and in 2019, I froze that. Meaning I—they’re no—I’m holding all those securities, my wife and I, to maturity. And munis were always thought to be a pretty safe place for a Fed person to invest because, as you know, the lore was that the Fed would never buy municipal securities. So it was not an uncommon thing. And so then comes the, you know, the COVID crisis, and I reversed that policy, and I did it without hesitating. And the reason was that the financial markets, including the municipal financial market, were very much on the verge of collapse. And it was time to go, and we did. But we also checked with the Office of Government Ethics and—who looked carefully at it and said that I didn’t have a conflict. So that’s one answer that I wanted to share with you. Secondly, you’re right, though, as—we’re going to be looking at all those things. I don’t want to get ahead of the process here and speculate about particular outcomes. But this, again, comprehensive and deliberate process—we’re going to make changes. I want to be able to look back on this years from now and know that we rose to meet this challenge and handled the situation well, and that what we did made a lot of sense and protected the public’s interest and the institution that we’re all a part of.

Question (Jeff Cox, CNBC): Thank you, Mr. Chairman, for taking the question. I just wanted to check in with you to see if you have an update at all on the efforts from the Fed to develop a central bank digital currency. I believe that the report was supposed to come this summer, and indications that it’s going to come this month. But the drumbeat seems to be kind of getting louder to see where the Fed’s heading on this, and just wondering if you can provide some update there.
Answer: Sure, I’d be glad to. So we think it’s really important that the central bank maintain a stable currency and payment system for the public’s benefit. That’s one of our jobs. We also live in a time of transformational innovation around digital payments, and we need to make sure that the Fed is able to continue to deliver to the public a stable and trustworthy currency and payment system. So there’s extensive private innovation, a lot of which is taking place outside the regulatory perimeter. And innovation is fantastic. Our economy runs on innovation. But where the public’s money is concerned, we need to make sure that appropriate regulatory protections are in place, and today they really are not in some cases. So with that in mind and with the creation of myriad private currencies and currency-like products, we’re working proactively to evaluate whether to issue a CBDC and, if so, in what form. We have two broad workstreams, one of which is really technology, both at the Board and in the Federal Reserve Bank of Boston’s work with MIT—the other of which is to identify, scope out, deal with, analyze the various public policy issues. As you mentioned, we do intend to publish a discussion paper soon that will be the basis for a period of public engagement— engagement with many different groups, including elected officials, around these issues. We think it’s our obligation to do the work, both on technology and public policy, to form a basis for making an informed decision. The ultimate test we’ll apply when assessing a central bank digital currency and other digital innovations is: Are there clear and tangible benefits that outweigh any costs and risks? We’re also, as you know, investing heavily right now in building a new settlement system for instant payments in the U.S. It’ll be the first such major expansion of our core payment system since the 1970s. We found the case for this quite compelling—for consumers, businesses, and just ensuring that all financial institutions have access to that payment system. So, bottom line, we haven’t made a decision about the CBDC, but we will be issuing a discussion paper soon in order to form the basis of this public interaction that we’ll have. Thank you very much.