Hammack: Stablecoins and Private Credit Pose Financial Risks

Federal Reserve’s Vice Chair Michael Hammack has raised concerns about stablecoins and private credit, highlighting their growing influence on the current financial landscape. He noted that hedge funds and life insurance companies are operating with substantial leverage levels, contributing to a ‘quite loose’ financial environment. Hammack cautioned against lowering interest rates at this juncture as it could potentially distort market pricing and delay price correction. He also warned that rate cuts may extend high inflation and heighten financial stability risks if implemented solely for risk management purposes.