I think you have stuck to your guns so far but i want you to keep sticking to your guns. I would like to turn to some questions about facebook and its proposed cryptocurrency, libre. I am a supporter of innovation in the Financial Sector. Cryptocurrencya could really deliver real for increased friction and more access for consumers. As somebody who has spent the last couple of years dealing with social media and facebook in particular, i think it would facebook hasy that developed something of a trust deficit and that and that the kind of Silicon Valley mindset of move fast and break things maybe works when you were thinking about it in a Technology Framework but when we are thinking about the kind of implications social media has had around consumer privacy, public discourse, that no regulation does not always work. The House Financial Services committee, yesterday, you noted post many concerns, including potential risk to the security of the financial system. Aboute your concerns Systemic Risks, Money Laundering, privacy and other items. Fdicpast week, the former chair called him the fed to exercise additional oversight over libra, possibly as it is more built out and the facebook havet, the ability to credit disruptions and consumer losses, financial mismanagement of the reserve. The truth is we could be systems without the type of Regulatory Oversight thatled to the gaps created the crisis is that were pointed out the crises that were pointed out. Up with that same circumstance. Could you expound a little bit on what you see around these and thery risks liquidity risks presented by libra . Chair powell we need to do a very key full a very careful Patient Assessment of what the risks really are and that will take time and the idea that this would be going into implementation within 12 months is not going to be prudent proved right. We are going to take more time than that. One ofntioned earlier, the key issues is that there is not a single credible Regulatory Authority that can be responsible for oversight and held accountable for its oversight. It falls into many pockets. We are going to be looking at that. I would not want to prejudge what we do. Be that we have not been great recently at getting things across the finish line. My hope would be that you take a serious look here. I think back to concerns i had back in the late 90s when social media was set up. I was the telecom guy and rules of the road that were set up were these were done pipes, we were not going to put regulatory structure around it and we are 20 years later, 65 percent of americans get their news from facebook and google. We have the ability to disrupt our democratic processes. We see hate speech from either end of the political spectrum being brought forward. I would be concerned as we think about the innovation in this space, that we dont make the same mistakes back in the late that we do more with this innovation and make sure there is going to be access for thirdparty wallets, not just a facebook product, that we think about thirdparty developments 30 thirdparty developers to plug into this stuff the system. Getting this right is so terribly important. I look forward to working with you and the other regulators to make sure we get it right. Chair powell thank you. This has gotten peoples attention in a way that is very clear, not just ours but the other regulatory bodies around the world. Facebook has taken advantage in the gap within the current system. We have to make sure we dont have more gaps in the financial system. Senator rounds. Chairman powell, thank you for being here today. Before i begin, i wanted to comment on the insurance capital standard being developed by the iaias. My fellow congressmen hit it on that nail yesterday when he made it clear that anything that fails to recognize the method in the unit it states is unacceptable and i appreciated your comments agreeing with that. Iris i appreciate the response from the vice chairman on this issue but i remain concerned that the eu is using as a backdoor. The eu insurance regulator took a victory lap at the end of their latest annual reports, that they achieve their goal of having solvency as the practical of the iaics. Moving forward we want to see a strong assertive response from the u. S. To the iais. My first question concerns the capital plans that banks are required to develop under the framework. The ceo of jp morgan, one of the banks required to per dissipates at some the about the annual shareholders letter i found rather striking. Feds mostr the extreme stress testing scenario where 35 of the largest american losses, thextreme combined losses are about 6 of the total losses or resources of those 35 banks. Jp morgan chase alone has nearly three times the loss absorbing resources to cover the projected banks. Of all of these 35 to chairman, it seems absurd me that we are forcing an institution like jp morgan to hold not just enough capital to cover its own losses but also the losses that the other 35 largest institutions three times over. The capital tied up is capital that could be deployed to help firsttime homebuyers or lete a home ors main street entrepreneurs start a business. In boston earlier this week, capital stress test were said to be more predictable and easier for firms to pass. My question would be, do you agree that see card framework should be revised . That wewell i think are going to have to continue to the check the tests will have to evolve over time where they will become out or they will become out of touch with the reality. We are committed to making the appropriate changes. The banks obligation is to have a minimum level of capital post stress and they will want to have a buffer on top of that. That is the test they have to pass and we dont want them to be able we have made a pretty good judgment about what that minimum amount would be. I think the level of capital in the system is just about right. I do not think it should be less , particularly for the largest banks. Onre are lots of work going and this was the subject of that conference in boston on monday or tuesday. We are going to preserve the overall strength and power of them while making them more transparent. I i appreciate that and understand the Capital Requirements are important, it just seemed surprising to me what the current guidelines would do in terms of the amount of capital they are and i think there is a cost, when you maintain that versus being able to put that back out in terms of loans to places that need it. I recognize this is something that is ongoing but i just want to point out, it seems to be a little larger than i wouldve ever expected it to be in terms of the capabilities today. Chair powell the level of capital that we have required of the largest institutions in particular is about right. It is high. It is not even been 10 years since the financial crisis. We have not been through a downturn. It is too early to be talking about reducing those standards. One other question on the sammy on the semiannual Monetary Policy report, as well as commercial and residential to continue to grow into 2019 and that Bank Profitability remains solid in the First Quarter of 2019. I was encouraged to read this because of the pressure that farmers face due to trade disputes have led to whether or not banks will continue to make loans in the big sector in the aggie sector in the ag which during this time in net farm income is down 5 . Chair powell the answer is yes. Our farm belt banks have had a lot have had a lot of experience in dealing with the issues that farmers are can confronting right now and as a whole, the Agricultural Sector is in a tough place. It is a tough time and i know that banks are trying to work through those difficulties with farmers. Very good. I appreciate the work youre doing. Chairman. Ou chairman powell, thank you for being here. I will ask a series of questions about Severe Weather and Climate Change and the first thing i want to say is that i dont expect Monetary Policy to solve Public Policy problems but i do think it is important in your supervision capacity that you measure risk accurately and completely until the first question i have is, does increased Severe Weather pose a risk to the institutions that you supervise . Chair powell yes. Require this, we do Financial Institutions that we supervise to have a plan and understanding to deal with Severe Weather, particularly those that are in areas exposed to increased risk of Severe Weather. Chair powell does severe is Severe Weather increasing due to Climate Change . Chair powell i believe it is, yes. Has the fed changed its approach in assessing Severe Weather risk over the last 10 or 20 years . Chair powell we had a policy in place. There has been quite a lot of Research Done at the fed around Severe Weather and its effect on the economy. We do incorporate that into our supervision of these institutions. Ofting edge understanding the effect of Severe Weather events on the economy. We do incorporate that into our supervision. Has the process change . Process changed . Chair powell i would have to go back and look. Is severeson i ask weather, generally speaking over the last 10 or 20 years has been that cannotomething be helped into a certain extent it cannot be accounted for, except that there is this outside risk but when that risk of a 500 year storm arises in 15 years. The question becomes, are your systems adequate to the conditions on the ground . I can take that for the record if you dont want to puzzle through it. Chair powell one way to get at that is to go back to superstorm sandy. In a world where you have water lapping at the foot of the new york fed which is not that close to the water in downtown manhattan, you know you are going to need robust plans and redundancy and all of those things to deal with Severe Weather. We know that and we do apply high standards to the key payment utilities and other Financial Institutions. Chair powell let me reach let me read you something from the bank of england. Is cost of Climate Change having a devastating effect as financial policymakers and credential supervisors, we cannot ignore the obvious risks before our eyes. We must integrate the monitoring of climaterelated financial risk into the daytoday supervisory work of Financial Stability and board risk management. Do you agree with the bank of england . Chair powell i guess i see Climate Change as a longer run issue. I dont know that incorporating it into the daytoday supervision of Financial Institutions would add much value. Let me make the case for daytoday supervision, especially credential supervision. You mentioned cybersecurity risk, political risk, Balance Sheet risk. You measure risk. This risk is accelerating. I understand the desire for the fed to stay out of the political fray and out of the Public Policy fray, but this risk is accelerating and i am satisfied that you are puzzling through this and that the staff is trying to get this right, but i am not satisfied that you are drawing the correct distinctions climate andher and that you are adequately accounting for the increased frequency and severity of Severe Weather events, due to Climate Change and there is one other part of Climate Change that is not just individual events, but it is changes in weather patterns that could cause individual portfolios to be more at risk. Do i have your commitment to continue to work with our office on this problem, especially given that more than a dozen Central Banks around the planet are working really hard on this, and without an ideological lens, but just to try and adequately measure the risk . Chair powell yes. There is nothing really going on in the other Central Banks that we are not aware of as i think you know. Thank you. Senator purdue. Mr. Chairman, thank you for your forbearance, your second day going through this. I would like to go back to the topic that we covered just a little bit earlier. Today we have in the world about 60 trillion of sovereign debt. The United States has about 22 trillion of that. Corporate debt in the states between the last decade, 2008 and 2018 about doubled but still only represents about 4 of more than 60 trillion in overall u. S. Capital market assets. My question after reviewing all the data around corporate debt, sovereign debt and the increase in corporate debt, do you believe that leveraged leaning lending has reached a point to become a Systemic Risk . If so, could you explain what information you used to look at that . Chair powell as far as corporate debt is concerned, i would tell you i do not see it as rising to the level of Systemic Risk or a Financial Stability risk which we think of is something that could threaten the funding ash threaten the functioning of the financial system. Funding the functioning of the financial system. Leveraged lending is held in a collateralized loan and those are marketbased vehicles. They are not on the Balance Sheet of banks. They are not runnable. It was runs during the crisis that caused a lot of damage. The funding for those vehicles had longer expected life and the assets that they own. That is an important thing. The next biggest holder of that paper is mutual funds and those in theory could be subject to accelerated withdrawals and not kind of thing. We monitor that carefully but we have seen them weather lots of downturns. Empirically we have seen them weather downturns and spikes and volatility. We are very focused on monitoring it and confirming that it does not evolve into something that could threaten the system. In the meantime, it clearly can be an amplifier to an unexpected Macro Economic downturn. I tried to buy a cup of coffee in china last year with a credit card or cash and you just could not do it. It was all we pay, et cetera. With the cryptocurrency question you had earlier, it seems to me that technology is running ahead of us and our ability to look at how currency is managed around the world, and the impact that it could have on how weaver the last hundred years or so have used reserve currency in the world and we benefited from that in the United States, the ability to borrow 22 trillion of debt depends heavily on our ability to be the reserve currency and the dollar is a reserve currency. What risk to the structure itself and the fact that the dollar has enjoyed for 100 years now, being the reserve currency . Chair powell being the reserve currency does confer benefits and costs and one of those is, one of the potential costs is that you are a little bit immune from market discipline because Everyone Wants to be in the most liquid asset and it tends to be a pretty stable equilibrium. There tends to be one reserve currency that tends to last for a long time but if you were going to keep that role, you have to run your fiscal have successfully. You have got to be running a sustainable fiscal policy and in the near term i dont think there is anything to threaten but in the medium and longerterm, we will have to address our fiscal issues. Decade 32 trillion in a , approaching 50 of all sovereign debt in the world at that point, because a lot of other countries are deleveraging, all of a sudden, and you are medium to long term, but at the next decade, we will more, that near to long term definition could fall in within the next decade or so could it not . Chair powell you have to have another reserve currency that has more attractive features. The rule of law, we have institutions, we are a trading nation, we are open to trade and we have a highly developed financial system. When you are the reserve currency, you can have inflows and outflows and you have to have a Financial Sector that absorb and manage that, otherwise you will have spikes in inflation and currency volatility. Another currency would have to emerge that could take over that role and there really isnt one right now that can check all those boxes. In the Market Basket concept has no more appeal today than it did a decade ago. Chair powell it has not taken off. Nonetheless, we should not assume that it will last forever because it wont. Thank you for being here. Senator smith. Thank you so much for being here today. I appreciate your service and i want to note that i believe in the first 30 seconds of your testimony this morning, you used the word independence. I believe i have heard colleagues on both sides of the aisle pay tribute to how important it is to have an independent fed. I would like to thank you for that, your steadfast defense of that. I want to quickly follow up on comments that my colleagues said. Senator tester asked what is going to tip the scale too bad when it comes to longterm economic prospects, and i would like to just for the record say that i do believe that our increasingly volatile climate, Climate Changes on the same scale as the longterm threats to a growing national debt, in terms of the ability of our stability of our economy. The farmers in minnesota looking at lost yields and a complete shakeup of the world in which they operate, for them this is a short term and immediate issue. I want to add my thoughts to that point. Speaking of issues that are longterm challenges to the economy, you mentioned housing and the lagging in housing construction. What we are seeing all over the country is that housing costs are growing faster than wage growth and the market is producing. Athave shortages of Housing Price points that people can afford and we are seeing highend homes being built but not homes that people can actually afford. I would like to have you talk a bit more about the impact of this. This has impacts on employment and rural areas and longterm economic prospects for the country and what the feds role could be. Chair powell what we hear from the homebuilders is that it is a series of factors that are holding them back and challenging affordability. Cases, there was a big homebuilding sector in 2005 and a lot of those people retired in 2007 and now you have a shortage of Skilled Laborers, so it is hard to get people on the job, electricians, plumbers, carpenters and other people. No matter what you pay them, just finding people who can do that work. Do you think our immigration policy might have something to do with that . Chair powell that is what we hear from homebuilders. That is part of it for sure. It is hard to get lots. Areas, youropolitan have a lot of homes and traffic and that kinds of things. Gone up andts have some of that is tariffs. The homebuilders feel like they have been hit by a perfect storm. On mortgages having dropped significantly over the course of the year, we expect a turnup but these longer run challenges are going to be there and affordability is going to be a challenge. What i hear from businesses and communities in rural minnesota is that the lack of workforce housing, Affordable Housing for people who have good jobs is a real limit on economic growth. I am doing a series of roundtables across the state to get at this so i appreciate your comments on that. Topic, senator shelby was talking about the relationship between Interest Rates and growth. You are under political pressure which i did not approve of, to lower Interest Rates. I am not asking what you were going to do but i want to look at the lesson of what we are seeing in the eu. In europe, the central bank essentially has negative growtht rates, economic is only about one point 2 per year and inflation is below target. My question is, what can we learn from the experience in europe . It looks to me or some could conclude that you are losing thattools in your toolbox, seems to be the challenge they have. Some of it is Monetary Policy and some of it is fiscal. Chair powell it is the same lesson we learned from japan, that you see that in a less extreme form in europe. You dont want to get behind the curve and let inflation drop below 2 . What happens is you get into this unhealthy dynamic where lower expected inflation gets baked into Interest Rates which means lower Interest Rates which means less room for the central bank to react and that becomes a self reinforcing thing. We saw it in japan and we are now. That is why and we are now seeing it in europe. Thank you. I have several other questions i would like to submit for the record. I am especially interested in submitting a question around Deutsche Bank. The New York Times reported that Deutsche Banks Private Banking managers urged the bank to retain their epstein is a client even after the compliance officers recommended that the bank drop him as a client because. Of Reputational Risks. I will submit a question because of Reputational Risks. I will semitic question about what kind of quest what kind of customer represents a Reputational Risk and if not epstein then who. Thank you. Senator kennedy. Thank you mr. Chairman. Thank you mr. Chairman. Chairman, what is the Economic Impact in your judgment of illegal immigration on americas economy . Chair powell i would have to answer it in generalities. People who come in legally or illegally add to our workforce and contribute to gdp, certainly. That is part of it. Cannot growth, you really boil growth down into labor force and productivity increases. Immigration, total immigration has contributed more than half of the growth to our workforce in the last few years. What about illegal immigration . Chair powell there has been a lot of research on that and it has not reached a clear conclusion. There is research that finds no visible impact and there is research that finds it has a modest impact. You think illegal immigration is a good thing . Chair powell it is not at all in our sayso. Oris like trade or guns other things we do not take part in. In part it is. Let me explain my perspective. We welcome about one million of our worlds neighbors to become american citizens every year. I think that makes our country stronger. I think we can agree on that. Unfortunately, we have a lot of folks that come into our country illegally. Part of the reason so may people want to come to america is we have rights and we cherish them and we protect them. One is the last time you heard of somebody trying to sneak into china . They want to come to america. With rights go responsibilities. One of our responsibilities is to abide by the rule of law. Federal law is not an a la cart menu. You cannot choose which laws you want to abide by. To come into our country illegally is a violation of federal law. That we seem to me would want to do everything we can, if you believe as i do that people respond to incentives not to give people an incentive to violate the law. That is my perspective on it. People who come into your country, in my judgment, is not racist. It is prudent. In the interest of public safety. Are you familiar with the aogram called directed mexico. It is a program under the fed that facilitates remittances from people in america to other countries with low transaction and exchange. Chair powell this must be part of our ach operation. We do some remittance business through ach internationally. You make it easier for people in our country to send money to another country. Chair powell very limited. Both of that happens in the commercial banking system. We have something called automated clearinghouses set up to do things like payrolls and we do that internationally. It is not a great tool for sending bank remittances. That you give a program, youre just not familiar with it . Chair powell i will look into it. Do you know if u. S. Citizenship is a prerequisite to be able to use the program . Chair powell i do not. Do you know the impact of your program on the American Economy . What does it do for us. Chair powell i would have to look into those things and i would be glad to do it. You are aware that remittances form a huge portion of the gdp in other countries, like mexico. Chair powell a number of countries rely on remittances from relatives who work in the United States and send money home. And if someone is here illegally, this program could be an incentive, could it not . Chair powell in principle, yes. Im unfamiliar with the question. That is fair. I do not want to catch you off guard. I will be calling you. I would like to visit more about this and whether this is a good idea or whether it improperly incense people to break the law. Chair powell ok. Thank you, senator. Thank you for your good work. Senator van hollen . Thank you for your leadership. As you know from previous questions ive asked you, ive been very frustrated about the lack of development of a realtime Payment System at the Federal Reserve. There are some questions in the house yesterday about this, as you would knowledge, the fed has been looking at this for five or six years. In the meantime, every day that goes by, the lack of a realtime Payment System is costing millions of americans lots of money. Over a year we are talking about millions of americans losing billions of dollars, especially those going paychecktopaycheck. At the same time, other countries, great britain, the eu countries, lots of other countries have gotten there before us and there is no reason we should of gotten there a long time ago. Because of lack of progress, there has been more momentum for a de facto private sector version through the consortium of big banks, the clearinghouse, and are concerns about that system. The former vice chair of the ftc and bruce summers, formerly at the fed, recently wrote an editorial about their concerns with the largest banks in the country controlling the Payment System. I want to quote from their article. They say the needs of consumers and businesses in the depository institutions nationwide will be best route best served by the Federal Reserve continuing to play its role as a payments processor. Alternative is to abort is to award the clearinghouse a monopoly resulting in a less efficient market for immediate payments. Do you share the concerns they expressed in that editorial . , wer powell as you know have a proposal to provide a realtime Settlement System 24 7, 365, and asked the public to comment. Letterstten 900 comment and this proposal came out of our faster payments initiative. We chose to put people together. Not to cut you off, but when you expect to get this done . Other countries have done this. It is not that complicated. It is a question of making the decision. Do you share the concerns expressed by those individuals in their editorials. ,s you think about your answer i want to point out that 2. 5 years ago when the big Bank Consortium was preparing to launch realtime Payment System they told the department of justice they would charge the same price to all institutions regardless of their size. About a year later, the Justice Department cited that assurance when it told the clearinghouse it had no intention to take any antitrust action against them. Last month, the clearinghouse added a big caveat. They said they would only maintain that commitment if there was no other competition, meeting the Federal Reserve. Community bankers are very worried about this. Here is a quote from the ceo of a 93 million asset Rich Community bank in ohio. Talking about the fed, if they do not take that as a dare than i do not know what it takes for the fed to serve as a central bank roll. We have to make a decision here because the lack of the fed making the decision is putting in place a de facto clearinghouse. If that is the result of a deliberate decision, that is one thing. If it is the result of interaction, there are risks at stake. Chair powell we are working our way through the comments and approaching a decision. We have to wait is carefully under the monetary control act and under our regulations. You are right that the smaller institutions are strongly in favor of our doing this. There is a range of commentary. We have a process we have to go through. We have been going through it and expect to reach a decision. I would be concerned with providing the biggest banks and monopoly over this area of transactions. Quickly, you have indicated how important it is for the fed to be independent. The president does give you a call from time to time, right . Chair powell he has. Has you raise the issue of Deutsche Bank . Chair powell by longstanding practice i respect the privacy of my conversation with an elected official, including the president. There is no executive privilege between the president and the Federal Reserve. It is an independent body. Chair powell it is not a legal matter. I would give you the same respect. A group of senators on this committee have written to you about the Deutsche Bank situation where Senior Executives at Deutsche Bank overruled one of their experts who wanted to issue a suspicious activity report with respect to certain trump entities, financial entities. That was overruled. Deutsche bank is under your regulatory purview. How you provide us assurances that will be looked into when you have a whistleblower case . Chair powell we have an enforcement action in place against Deutsche Bank for its system and Money Laundering issues. We are providing standard oversight to that at this time. Can you provide assurances that that kind of situation would come at her that purview . An investigation into that kind of situation. Yes. Thank you mr. Chairman and chairman powell. Thank you for being here and for your testimony. One of the shortterm risks in the economy i fear and that you have highlighted are the ongoing negotiations in congress over Government Spending and the debt ceiling. Minutes the june fomc it was written that participants agreed that a Downside Risk was a sharp reduction in Government Spending. If congress does not reach an agreement, there is a potential for a 100 20 billion immediate reduction in federal spending. Would you elaborate a little bit on what you believe, will kind of risk does this represent to the economy and how is the fed processing this risk . Chair powell it is essential congress raise the debt ceiling in a timely way, by which i mean a way that allows the United States government to pay all of its bills. That is essential. Any other outcome is unthinkable. We have always pay our bills. It must happen that Congress Raises the debt ceiling in time to allow that to happen. The consequences of failing to do so would be unpredictable and no one should assume the fed can be relied upon to shield our the short, medium, and longterm negative consequences. Is there risk in protracted negotiations . If we are in the 11th hour of discussions and 70 times we have seen, like last year with the government shutdown, with disaster relief, there is all this political posturing and dueling press conferences. We end up getting down the road and getting close and they fall apart. Is there risk in the protracted negotiations and waiting until the 11th hour . Chair powell markets have seen this movie and they think they know how it ends. They tend to look through that. You see some of the treasury securities maturing, they might theory bit off on the there might be some delay in payments. Clearly, everyone is assuming this will get worked out. If that were not to happen, that would be a big surprise and out a good one. And not a good one. I appreciate your response. Maybe congress and the president can take a lesson and get it done now instead of going through the protracted who shot john thing and here we are. I want to go back to a question my colleague senator shelby talked about with regard to trade and the apparent progress in trade. I want to couple that with what you have talked about with regard to so many sectors of the economy who are not feeling the buoyancy of their jobs, of their wages, and things like that. Our manufacturers in my state and farmers in my state, im not sure they have seen the progress that was initially seen, that you talked about. Regardless, they are feeling the pain of the uncertainty. Those challenges are broad in scope. We have uncertainty with china. There is uncertainty with canada and mexico. There are steel tariffs and auto tariffs. There are retaliatory tariffs on farmers and yesterday we heard there may be french tariffs and even our xm bank needs three authorization. In my state, that seems to be affecting folks in those rural areas, africanamerican folks more than most. It has not hit the consumer just yet. It is going to happen. That in the short term we will see tariffs cause an increase in the supply of things like bibles and artificial fishing lures, which are staples in alabama households. Can you elaborate for me on which of all of this in particular is the thing that concerns you most about the Current Situation with tariffs . What are those concerns you have . Those concerns are all of the board and we seem to be going alone. Chair powell it is general uncertainty on the part of businesses. In householde that confidence surveys and things like that. You do see it in Business Confidence surveys. The concern would be that over time it will weigh on the Economic Outlook and is a concern. We have been hearing that from our business contacts all year long. The president has on his desk a report from the Commerce Department about whether or not foreign automobiles and suppliers are a National Security threat. That has been sitting on his desk since february. It has not been released despite many of us on this panel asking. Is the fact that that is sitting there and the president is not releasing publicly, does that add to the uncertainty . Chair powell i would be reluctant to comment on any aspect of trade policy, which is not our job. We try to call out the things we are seeing. I would leap at the level of high uncertainty. I appreciate the answers. More comment from me than anything else. Thank you, mr. Chairman, so much. Thank you, senator jones. Mr. Chairman, we do not have any other senators here but we have senators coming. Senator brown will be back in a few moments. He and i are switching out. While we wait for some of the other senators, we want to have a chance i get to ask you a few more questions of my own. I want to go back to the cryptocurrency issue. You indicated before as you started to look at the new libra proposal that youve been in communication with other Central Banks and other regulators as well as United States regulators. Are you aware of any other cryptocurrency proposals that are out there other than libra . Something else globally being developed . Chair powell not really. There are Companies Looking at internal stable corn type ideas to use with their customers, but im not aware of anything that could potentially be quite so scalable so quickly as this given the existing network the company has. Questionurn to the that senator purdue had asked you about the impact of a cryptocurrency system on our reserve currency in the world, particularly in the United States reserve currency, which as you both indicated in your conversation has benefited from our currency being the worlds reserve currency if a cryptocurrency system were to become prevalent throughout the globe, would that diminish or remove the need for a reserve currency . In the traditional sense . Chair powell things like that are possible but we have not seen them. We have not seen widespread adoption. Bitcoin is a good example. Almost no one uses bitcoin for payments. They use it as an alternative for gold. It is a Speculative Store of value like gold. People have been talking about this since cryptocurrencies emerged, but we have not seen it. That is not to say we will not see it. If we do see it, we could see a return to end era in the United States when we had many different currencies, the National Banking era. Thank you. I do have more questions but some of our senators are returning and i will turn to senator tillis. Thank you, mr. Chairman. Chair powell, thank you for being here. Quick question on payments maybe a couple of questions. Do you think the current private sector Payment Systems are broken . Chair powell i would not say they are broken. What part of the problem exists out there that is prompting the fed to move forward with a payments platform . Chair powell weve not decided to that we have not decided to do that although we do play an active role in the Payment System already. Where the u. S. Lexis realtime payments broadly available on an equitable basement. , the fedast five years has been trying to push us. We do not have authority in this area. Trying to push us into a place where that will be available to people, as it is in many other countries. How we go about funding the ongoing operation . If you decide to move forward with the fed Payment System . Chair powell anything we do in the way of the Payment Service is subject to the monetary control act. The monetary control act requires a couple of things. I will not get the language right, but the sense of it is it must pay for itself on a basis that is comparable to a private provider, meeting the cost of capital and taxes. I have a series of questions i will submit for the record on the decision process. I hope that we can get to a point where we can facilitate a private sector solution that addresses some of the things you rightly point out, but not necessarily take on. Thank you for the great work you are doing. I think you are doing great work as chair and i appreciate everything you do. Some of the most confusing times for somebody in your position. I appreciate it. Someone mentioned earlier, i was out, we have multiple committees and multiple votes. We had folks on the other side of the aisle that are concerned as Deutsche Bank takes itself apart, the bigger banks will pick up those assets and maybe even get bigger. I do not think that is going to happen. What i think is probably going to happen is we will see that move into private equity where they are probably chomping at the bit to buy things for pennies on the dollar. What is your view . Chair powell as you know, that is the kind of thing i used to spend my time doing. I have not looked at the company with that question in mind. I will contact you i will come back to you on that. Another area im curious if you are in the private sector and had a 10 year yield close to 2 , would you extend your maturity profile and lock in financing . Based on todays market . Chair powell as a general matter, i think this would be a nice time to lock in, yes. As we take a look at our own considerit time to another shortterm transition cost to potentially consider what other countries are doing on longerterm bonds, up to and including 100 year bonds . Chair powell this is squarely in the wheelhouse of the Treasury Department who do the debt management. I know they look carefully at doing very long bonds. Do you have any view on the pros and cons of doing it . Chair powell i dont. We look quite carefully. When i was at treasury we looked carefully and concluded there might or might not be a market to do it so we did not get it done. The last thing i will leave you with, so to make sure the other members given their questions, we will be submitting additional questions for some of my ageold priorities in terms of regulatory work you have done, specifically around margins, volcker, recalibrating the surcharge and a couple of other things. We believe these are things that are positive that we need to see progress on so we will be submitting questions for the record so we can see what the progress is and timelines for results. Thank you for being here. Reid, are you ready . Senator cortez . Chairman how, it is good to see you again. At yesterdays hearing, you said American Workers have missed 10 years of wage growth. You said the Federal Reserve needs to do a better job of calling out the declining returns to workers and you said more Business Owners realize that an economy where the richest 1 of families control 40 of the nations wealth is problematic. Said one answer was for workers to increase their education. You said this before. Wrong. Me if i am im looking at the fed data, i of thes on page eight Monetary Policy report that just came out. , it read this correctly shows wages have barely increased for high school and lower educated workers and collegeeducated workers. If you look at that graph, and how im reading it is from 2007 to 2017 wages were flat for both. In the past year and a half wages of ghana 1. 5 over 2000 several levels for College Education 2007 levels for college and chair powell these are real wages after inflation. That is what the trick is. If you at inflation back in, nominal wages have increased. For both categories, it has been flat . Chair powell a nominal increase from both category a nominal increase from both categories. Is that correct . Chair powell if you look at the picture on the right, you see you had declines in real wages and then you see them in policing around 2015. Generally speaking, thats right. Thats right. Would you agree that at least what i see here, that the 1. 5 wage increase over a decade is inadequate . Chair powell i was referring to the first decade of the century when i made that comment. What happened beginning at about 2000, the share of profits going to labor declined. Around acillated particular level for a long time , and then around the are 2000 it went down over 10 years. What we talk about when we talk about wage growth is 3 wage growth, which is a healthy level of wage growth. The problem is not the change, it is the level and we missed period where workers were losing ground in wages. It is complicated, but that is what i was referring to. Touch on this idea that somehow increasing ones education will lead to higher wages for them. Do you agree . You have said that a couple of times. I have heard the conversation you had with senator cotton. Is that something you are saying to address an increased higher is tofor individuals ensure they get a better education and what you mean by that . Chair powell i think people with Higher Education tend to have substantially higher compensation in their jobs. The value of a College Degree compared to not having a College Degree in terms of lifetime earnings is enormous. Im not saying and i appreciate that. Here are the concerns i have with these numbers. Come to my state, nevada. High school labor, organized labor, individuals graduate high school but they do not get a College Degree, they go through an apprenticeship and learned skill or a trade and they are making good money, sometimes better than some of the folks that dont call it. What that go to college. What i see in the numbers is not a reflection of the two the true drama graphic the true demographic i see in this country. This idea that we are characterizing people based on whether they are low income or high income, i think it is a false narrative. People with a High School Education can get good jobs. They can go through an apprenticeship program, they can get the Skilled Labor we need in this country. It goes back to this issue. Weaknesses, the housing, manufacture, and trade. Housing is the number one issue in the state of nevada. We have lost all of the skilled trade because of the downturn in the economy. We should be investing in those individuals and getting them back to a level they can go through the apprenticeship programs. I do see and agree with you that because we have low unemployment, that has increased the wages a little bit. Sayorced these companies to it is a competitive market and i will have to pay more to get more people in. That should not be the only condition for increasing wages for individuals across this country. The other thing you need to know, if you dont know, come to my state. Whether youre a single mother or a parent of a twoparent family, these families are working more than one job. I think one job should be enough. I do not think you should have to make two jobs to make minimum wage, and a minimum wage of seven dollars an hour is poverty level. My concern of the statistics is i want you to get into the true demographics of the country and what is going on with the false narratives i keep hearing, even from the president , who keeps arguing unemployment for africanamericans and latinos are wonderful. You even show here that it is not. We have to do a better job. Lets look at the true numbers we have in this country, because that is the challenge i see here and not this false narrative that keeps being thrown out. I appreciate the hard work you are doing and i thank you for that. I look forward to looking with you to working with you in the future but i invite you to have a further conversation on the data itself. Thank you. Senator scott . Thank you, ranking member, brown. Thank you for being here this morning, now this afternoon. I want to continue that narrative because it does draw my attention. I listened to your testimony earlier this morning, i had meetings in the office and i got to listen to your exchange with senator con on the Labor Force Participation rate, that the rate is ticking up slightly and one of the reasons we saw the 3. 6 unemployment go to 3. 7 is more folks going back to work for us. As related to the power of education and wages, i was raised by a single mother with a High School Education. I thank godas related to the shs necessary to support her sons. One of the things we can take away from the numbers is there is power in education. These numbers are three or four years old. The person who does not finish high school as an average wage around 19,000. The High School Graduate has an average wage around 29,000. A person with a College Education has an average wage around 50,000. Extra degree you go closer to a sixfigure income. The numbers are so undeniable