WASHINGTON—Treasury Secretary Janet Yellen is cautioning that technology has raised the possibility of reduced reliance on centralized intermediaries like banks and credit card companies.
Speaking to American University’s Kogod School of Business Center for Innovation, Yellen focused her remarks on the evolving digital world.
Yellen pointed to President Joe Biden’s Executive Order on digital assets and how it tasked the government to conduct in-depth analysis to balance the risks and rewards regarding digital asset development.
“I won’t predict where this work will take us, but that does not mean we are navigating without a compass,” stated Yellen. “Digital assets may be new, but many of the issues they present are not. We have enjoyed benefits of innovation in the past, and we have also confronted some of the unintended consequences.”
Five Points
NAFCU noted in its analysis of Yellen’s remarks that there were five points made:
- The U.S. financial system benefits from responsible innovation
- When regulation fails to keep pace with innovation, vulnerable people often suffer the greatest harm
- Regulation should be based on risks and activities, not specific technologies
- 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
- The country needs to work together to ensure responsible innovation
Government’s Role
“In my view, the governmentʼs role should be to ensure responsible innovation – innovation that works for all Americans, protects our national security interests and our planet, and contributes to our economic competitiveness and growth,” concluded Yellen. “Such responsible innovation should reflect thoughtful public-private dialogue and take account of the many lessons we’ve learned throughout our financial history.”
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