The soon-to-be House Financial Services Committee chairman Patrick McHenry is getting ready to reintroduce the Financial Services Reintroduction Act for a third time to bring a more inclusive financial system.
Earlier, McHenry introduced the Financial Services Innovation Act in 2016 and 2019. The bill aims “To establish procedures to reduce the time and cost of offering a financial innovation to the public and enable greater access to financial innovations.”
McHenry retweeted, “I am proud to reintroduce my bill to help spur financial innovation and inclusion. The Financial Services Innovation Act follows the same model as North Carolina’s successful regulatory sandbox program.”
On Dec 16, 2022, McHenry and Warren Davidson sent a letter to Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell “requesting an assessment of the threat to financial stability that failure of dollar-denominated foregin exchange and currency swaps could pose.”
#NEW: @PatrickMcHenry and @WarrenDavidson sent a letter to @SecYellen and Fed Chair Powell requesting an assessment of the threat to financial stability that failure of dollar-denominated foreign exchange and currency swaps could pose.
— Financial Services GOP (@FinancialCmte) December 16, 2022
This year the United States experienced one of the highest inflation rates ever, due to the disruption of demand and supply chains in the pandemic following the recent Ukraine-Russia war. High interest rates have greatly affected stocks, investors and cryptocurrencies. Due to high interest rates, cash flow in the economy has slowed down. The Federal Reserve raised its interest rate by 50 basis points or 0.50 percent in the latest announcement.
The United States central bank has raised interest rates by 75 basis points – four times – in a bid to tame record-high inflation. The November CPI rose to 0.1% from the last month and showed a growth rate of 7.1% from a year ago.
Central Banks Setting New Crypto Standards
On December 16, 2022, Bank for International Settlements (BIS) released the Prudential Treatment of Crypto Asset exposure report. The committee agreed to implement new crypto standards for banks by January 2025.
The report permits banks to hold 2% of their reserves in cryptocurrency from January 1, 2025. After considering feedback from stakeholders, the committee finalized the introduction of the policy by 2025. In June, BIS only permitted a few banks to hold 1% reserves in the crypto industry.
The committee classified cryptocurrencies into two different groups: Tokenized traditional assets and crypto assets with effective stabilization mechanisms come under Group 1. Meanwhile, all unbacked crypto assets are in Group 2. And the total exposure limit of Group 2 crypto assets must be less than 1%.
Source: https://www.thecoinrepublic.com/2022/12/20/a-bill-to-spur-financial-innovation-chairman-elect-mchenry/