US Federal Reserve Chairman Jerome Powell said he was more worried about the risk of a large-scale cyberattack than another financial crisis like that of 2008.
The risks of a 2008-like crisis with a need for government bailouts of banks were “very, very low,” the head of the US central bank said during an interview aired on Sunday on CBS’ 60 Minutes.
“The world changes. The world evolves. And the risks change as well. And I would say that the risk that we keep our eyes on the most now is cyber-risk,” he said, adding that concern was shared by multiple governments and private businesses, particularly in finance.
Additionally, those organizations invest the most against cyberattacks, he noted.
Powell said that the Fed was considering different types of scenarios: “There are scenarios in which a large payment utility, for example, breaks down and the payment system can’t work. Payments can’t be completed. There are scenarios in which a large financial institution would lose the ability to track the payments that it’s making and things like that,” he said.
The Fed was also looking at the possibility that part or even a large part of the financial system could shut down.
“We spend so much time and energy and money guarding against these things,” he said, adding that cyberattacks on major organizations happen “every day.”
Powell was also asked about the possibility of creating a digital US dollar, as China last month became the first global economic power to unveil a cryptocurrency.
He said that for now, the Fed was evaluating the possibility.
“We feel it’s our obligation to understand it. How would it work? What would the features of it be?” Powell said.
He also said the Fed was developing software and even designing the look of a digital US dollar, but the final decision on whether to make it public would only be made once its impact was fully understood.
The US dollar is “the world’s reserve currency. The dollar is so important... We do not need to be the first ones to do this. We want to get it right. And that’s what we’re going to do,” he said.
In October last year, Powell said that the US was thinking about issuing its own cryptocurrency, but added that a full assessment of the benefits and risks would take time.
Regarding the US economy, Powell said on Sunday that it was “at an inflection point.”
Growth and employment would accelerate in the coming months, he said.
However, he once again said that the COVID-19 pandemic continued to present a risk.
“We feel like we’re at a place where the economy is about to start growing much more quickly and job creation coming in much more quickly,” Powell said.
“The outlook has brightened substantially, and that’s the base case. I would say again though, there really are risks out there,” he said.
“The principal risk to our economy right now really is that the disease would spread again. It’s going to be smart if people could continue to socially distance and wear masks,” Powell said.
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