Cleveland Fed’s Hammack: Dollar’s status depends on rule of law, effective capital markets, and central bank independence

In panel remarks at the SNB and Its Watchers Conference in Zurich, Switzerland, Hammack said she expects “that monetary policy will need to move to a restrictive stance to bring inflation back to 2 percent in a timely manner.”

Federal Reserve Bank of Cleveland President and CEO Beth Hammack delivered remarks as part of a panel titled Stable Coins and the Demand and Price (Exchange Rate) of “Safe Haven” Currencies at the Karl Brunner Institute of Macroeconomic Policy’s SNB and Its Watchers conference in Zurich, Switzerland. 

Key Quotes:

On the dollar’s international status:

• “The dollar’s status depends on preserving the fundamental qualities that underlie its strength, qualities that provide a solid foundation for any currency. This includes maintaining central bank independence so we can deliver on our mission.”
• “A reserve currency has to be more than trusted. It has to be available, in deep and liquid markets, so that investors can choose to move in and out of the currency as they see fit.”

On how the Fed impacts the dollar’s status:

• “The Fed’s independence, along with its accountability to Congress, is critical to maintaining the world’s confidence in our commitment to 2 percent inflation.”
• “Delivering on our commitments is an important way the Federal Reserve helps the dollar remain a reliable store of value and that Americans can continue to reap the benefits of its global status.”

On digital currencies replacing the dollar

• “The price volatility of cryptocurrencies makes them a less certain store of value than the dollar.” 

On monetary policy:

• “Inflation has now been above our goal for nearly six years, and the pressures I’m seeing appear to be relatively broad based, reflecting both supply and demand.”
• “I expect that monetary policy will need to move to a restrictive stance to bring inflation back to 2 percent in a timely manner.”
• “I prefer getting to that stance through more frequent smaller adjustments when possible, something which would be less disruptive to households, businesses, and financial markets. This strategy would also reduce the risk of having policy fall behind where it needs to be and an inflationary mindset take hold.”

Read her full remarks: Reserve Currencies and Stablecoins

Federal Reserve Bank of Cleveland

The Federal Reserve Bank of Cleveland is one of 12 regional Reserve Banks that along with the Board of Governors in Washington DC comprise the Federal Reserve System. Part of the US central bank, the Cleveland Fed participates in the formulation of our nation’s monetary policy, supervises banking organizations, provides payment and other services to financial institutions and to the US Treasury, and performs many activities that support Federal Reserve operations System-wide. In addition, the Bank supports the well-being of communities across the Fourth Federal Reserve District through a wide array of research, outreach, and educational activities.

The Cleveland Fed, with branches in Cincinnati and Pittsburgh, serves an area that comprises Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia.

Media contact

Dani Carlson, dani.carlson@clev.frb.org, 216.672.1264