Many feel this was a total surprise by those who read these articles should not have been taken off guard.  


The Chair of [the Federal Reserve](https://leofinance.io/posts/@leoglossary/leoglossary-federal-reserve-bank-the-fed) called stablecoins a form of [money](https://leofinance.io/posts/@leoglossary/leoglossary-money) and that the Fed should have a say in the oversight.  This is not surprising that the Fed wants to be involved.  Here we see the proverbial power struggle.  However, it also does align with what we regularly discuss.  It is the [Eurodollar System](https://leofinance.io/posts/@leoglossary/leoglossary-eurodollar-system-market) all over again.


We will have more on that in a moment.


Overlooked in most conversations is the fact that Powell said they were not close to bringing out a [central bank digital currency (CBDC)](https://leofinance.io/posts/@leoglossary/leoglossary-central-bank-digital-currency-cbdc). 


>The Fed Chair also talked about the potential of a Central Bank Digital Currency (CBDC) but provided a disappointing answer stating that the US was a long way from making this happen. 


>On the prospect of a CBDC existing, Powell said that the central bank would not be managing retail accounts, i.e., accounts by an individual. Instead, these [accounts](https://leofinance.io/posts/@leoglossary/leoglossary-account) would be managed through the country’s banks.


<center>[Source](https://www.fxstreet.com/cryptocurrencies/news/fed-chair-jerome-powell-calls-stablecoins-a-form-of-money-and-says-cbdc-is-far-from-being-a-reality-202306211820)</center>


That aside, this is a game changer for [cryptocurrency](https://leofinance.io/posts/@leoglossary/cryptocurrency).  It is the validation that many are looking for.  Most who are serious about this industry realize their blessing is not required.  However, for the masses, this does make a difference.


So why is this no surprise?  Let us explore it.


 https://images.hive.blog/DQmUfDQMqihTSix3zEsoVXfiy1HUs6aX6hVPut4XQjKYAPF/image.png 


<center>[Source](https://assets.bwbx.io/images/users/iqjWHBFdfxIU/iWbJsuJlReJc/v1/1200x-1.jpg)</center>


## Cryptocurrency Is Eurodollar System


As I wrote on numerous occasions, cryptocurrency is the Eurodollar system.  This is something that few really have great knowledge about yet it all lines up.


The Eurodollar System is basically private, reserveless [bank](https://leofinance.io/posts/@leoglossary/leoglossary-bank) money.  Cryptocurrency is the same except we are removing the banks.  That is the main difference.


Hence, the stance Powell is taking is in keeping with the Fed's understanding that started decades ago.


Let us look at some statements by [Alan Greenspan](https://leofinance.io/posts/@leoglossary/leoglossary-alan-greenspan).  This is from [the June 2000 FOMC meeting](https://www.federalreserve.gov/monetarypolicy/files/FOMC20000628meeting.pdf).


He starts by talking about the importance of money to the [economy](https://leofinance.io/posts/@leoglossary/leoglossary-economy) and a [central bank](https://leofinance.io/posts/@leoglossary/leoglossary-central-bank):


>This is not to say that money is not relevant for the economy. For a central bank to say money is irrelevant is the deepest form of sin that such an institution can commit.


So far no problems.


>The problem is that we cannot extract from our statistical [database](https://leofinance.io/posts/@leoglossary/leoglossary-database) what is true money conceptually, either in the [transactions](https://leofinance.io/posts/@leoglossary/leoglossary-transaction) mode or the [store-of-value](https://leofinance.io/posts/@leoglossary/leoglossary-store-of-value) mode. One of the reasons, obviously, is that the proliferation of products has been so extraordinary that the true underlying mix of money in our money and near money [data](https://leofinance.io/posts/@leoglossary/leoglossary-data) is continuously changing.


This is where he said a mouthful.  


To start, he says basically they have no idea of what money is, either in transaction mode (medium of exchange) or store of value.  In other words, they can only extract from the database the [unit of account](https://leofinance.io/posts/@leoglossary/leoglossary-unit-of-account).


The reason for this is the "proliferation of products".  What does this mean?


In this one line, Alan Greenspan is admitting how the Eurodollar System completely hijacked money, to the point where it (The Fed) cannot even find it.  The products they create, which are used as money through the short term lending as [collateral](https://leofinance.io/posts/@leoglossary/leoglossary-collateral) has taken over.  


He does finish this thought by getting very candid.


>As a consequence, while of necessity it must be the case at the end of the day that [inflation](https://leofinance.io/posts/@leoglossary/leoglossary-inflation) has to be a monetary phenomenon, a decision to base policy on measures of money presupposes that we can locate money. And that has become an increasingly dubious proposition. 


All of this presupposed the Fed can find [money](https://leofinance.io/posts/@leoglossary/leoglossary-money) and that "has become an increasingly dubious proposition".  


Do you understand what we are dealing with.  This is considered to be one of the greatest Fed Chairs and he is basically admitting we cannot find money, let alone control it.


Of course, this paves the way for cryptocurrency.


## Powell Is Finding The Money


Since Alan Greenspan uttered these words, the Federal Reserve had a couple decades to find money.  While they might still not understand where it all is, Powell is finding it.  He realizes [stablecoins](https://leofinance.io/posts/@leoglossary/leoglossary-stablecoin) are legitimate as money and something to be dealt with.


Before we think this is some altruistic move, we can easily see the selfish motives of the Fed.


It is responsible for [monetary policy](https://leofinance.io/posts/@leoglossary/leoglossary-monetary-policy) for the [US dollar](https://leofinance.io/posts/@leoglossary/leoglossary-u-s-dollar).  Stablecoins that are issued in [USD](https://leofinance.io/posts/@leoglossary/leoglossary-usd) would be affected by Fed policy.  Thus, cryptocurrency actually helps the Fed, at least with their narrative.


Let us be clear: I do not believe Fed monetary policy is anything more than a publicity stunt.  They are completely ineffective.  The inability to not find money is only trumped by the lack of influence on it.  Hence, what the Fed does is immaterial to stablecoins.


However, this is another hat in the ring to claim regulatory power.  We now have the CFTC, [SEC](https://leofinance.io/posts/@leoglossary/leoglossary-securities-and-exchange-commission-sec), Congress, and who knows what else trying to take over.  Why not add the Fed to the mix?


The bottom line is USD denominated stablecoins enhance the monetary policy of the Fed, at least in the eyes of Powell.  This makes sense.  If you believe your actions are effective, then anything that deal with the [currency](https://leofinance.io/posts/@leoglossary/leoglossary-currency) in question is impacted.  This is true even if the connection is only based upon unit of account.


When we look at the [Hive Backed Dollar (HBD)](https://leofinance.io/posts/@leoglossary/leoglossary-hive-backed-dollar-hbd) as an example, we can see how this is the case.  The [coin](https://leofinance.io/posts/@leoglossary/leoglossary-coins) has no tied to the US dollar other than being a metric for conversion.  There are no [Treasuries](https://leofinance.io/posts/@leoglossary/leoglossary-us-treasuries) or other dollar [assets](https://leofinance.io/posts/@leoglossary/leoglossary-asset) backing it.  However, since it is dollar denominated, people in countries like Ghana, Cuba, or Venezuela who are using it derive the same benefits as a USD [banknote](https://leofinance.io/posts/@leoglossary/leoglossary-banknote).  The main difference is HBD is in [digital](https://leofinance.io/posts/@leoglossary/leoglossary-digital) form.


Powell, of course, was not referring to something like HBD.  He was expressive his views about stablescoins that has a reserve, most in US Treasuries.  Here is where the impact, in his mind, is even greater.


Nevertheless, this is a game changer.  The Fed wanting to be involved muddies the waters up even more.  It does add some legitimacy to what is taking place while also throwing another layer of interference for those who seek to destroy cryptocurrency.


In the end, this wasn't needed but it is nice to have.  If nothing else, it provides breathing room which to keep building.


The key is to get people like Powell on our side until we don't need people like Powell.


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