Central bankers discuss challenges to global monetary control, including concerns about Fed independence

From Yahoo Finance: 2025-07-03 10:30:00

Central bankers at a retreat in Sintra, Portugal, discussed challenges to global monetary control, including political attacks on the Federal Reserve and the rise of stablecoins. Concerns about Fed independence and the future of dollar lending to foreign banks were top of mind, with fears of a global dollar shortage looming.

Governor Rhee Chang-yong of the Bank of Korea expressed concerns about potential self-defense measures if the Fed cannot extend swap lines for global dollar shortages. Japanese central banker Kazuo Ueda emphasized the importance of regional swap lines as a safety net. There were discussions about pooling reserves across countries as a potential stopgap solution.

Central bankers debated the potential risks of stablecoins, with concerns over their efficiency and potential for runs if not properly backed. Bank of England Governor Andrew Bailey emphasized the need for stablecoins to hold their nominal value. ECB President Christine Lagarde warned that stablecoins could lead to a “privatisation of money”, undermining central banks’ ability to conduct monetary policy.

Read more: At Sintra getaway, central bankers mull threats to their domain