The president of the US Central Bank is more worried about the risk of a large-scale cyberattack than a global financial crisis similar to that of 2008.
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The risks of a 2008-like crisis with governments needing to bail out banks “are very, very low,” Jerome Powell said on the show. 60 minutes on the American channel CBS News.
“The world changes. The world evolves. And the risks too. And I would say the risk we watch the most is cyber risk, ”he said, adding that this is a concern shared by many governments, large private companies especially financial ones. It is also against this risk that all these players invest the most.
Jerome Powell pointed out that the Federal Reserve is looking at different types of scenarios.
“There are scenarios in which […] the payment system cannot work. Payments cannot be made. There are scenarios where a large financial institution would lose the ability to track the payments it makes and things like that, ”he detailed.
The Federal Reserve is also considering the possibility that part or even a large part of the financial system could shut down.
“We therefore spend a lot of time, energy and money to protect ourselves against that”, underlined the boss of the powerful institution, recalling that there are cyberattacks of large institutions “every day”.
Jerome Powell was also asked about the possibility of creating a digital dollar as China last month became the first major global economic power to unveil a cryptocurrency.
He pointed out that the Fed is currently evaluating this possibility.
“We believe it is our duty to understand. How would that work? What would be the characteristics? ”He explained.
He also indicated that the Fed is developing software and even designing the appearance of a digital US dollar, but the final decision to release it will not be made until its impact is fully understood.
The dollar is “the reserve currency of the world. The dollar is so important […] We don’t need to be the first to do it. We want to do it right. And that’s what we’re going to do, ”he insisted.
Last October, Jerome Powell previously indicated that the United States was considering issuing their cryptocurrency, but then warned that the full assessment of the benefits and risks would take time.
The creation of a digital dollar could benefit the US economy, Treasury Secretary Janet Yellen said more recently in an interview with New York Times published on February 22.
She then mentioned the need for central banks to properly assess the associated issues, in particular consumer protection.
Regarding the US economy, Jerome Powell estimated that it was now “at an inflection point”: growth and employment will accelerate in the months to come.
But he once again insisted that the COVID-19 pandemic continued to pose a risk.