Her comments come nearly a month after President Joe Biden signed an executive order outlining a federal digital assets strategy that aims to protect investors and foster innovation in the growing asset class.
The order, signed March 9, establishes a national policy for digital assets across six areas: consumer and investor protection; financial stability; illicit finance; U.S. leadership in the global financial system and economic competitiveness; financial inclusion; and responsible innovation.
Moreover, the order directs the federal government to explore a U.S. central bank digital currency, or CBDC, a digital form of legal tender.
During her speech, Ms. Yellen outlined the questions about a CBDC that the government is exploring, such as how it could be designed to manage risks associated with national security and financial crime, while also including privacy protections.
“I can’t tell you yet the conclusions we will reach, but we must be clear that issuing a CBDC would likely present a major design and engineering challenge that would require years of development, not months,” Ms. Yellen said.
The Federal Reserve in January released a report on the pros and cons of issuing a CBDC.
Ms. Yellen noted that there are a wide range of views on digital assets with differing opinions on how the government should regulate the asset class.
It’s Ms. Yellen’s view that “the government’s role should be to ensure responsible innovation — innovation that works for all Americans, that protects our national security interests and our planet, that contributes to our economic competitiveness and growth,” she said. “Such responsible innovation should reflect thoughtful public-private dialogue and take account of the many lessons we’ve learned throughout our financial history.”