U.S. Investigates Powell's Impact on Central Bank Independence, Global Financial System Faces Challenges, Crypto Market Hedging Narrative Heats Up

The U.S. Department of Justice has launched a criminal investigation into Federal Reserve Chair Jerome Powell, sparking widespread concerns among global central banks about the erosion of Fed independence. The market generally believes that this move could politicize U.S. monetary policy tools and pose a potential threat to global financial stability.

Focus is centered on the Federal Reserve's dollar swap lines.
Simply put, the Fed "lends dollars to other central banks at critical moments," and repays them after the crisis subsides according to the agreement.
This mechanism has served as a "lifeline" for the global financial system during the 2008 financial crisis and the 2020 pandemic shock, providing key dollar liquidity to multiple central banks.

European officials have begun discussing the establishment of an alternative dollar liquidity mechanism independent of the Fed, potentially accelerating the process of de-dollarization.

Former Fed Chair, some Republican lawmakers, and Wall Street institutions have warned that this move could undermine central bank independence and damage the U.S. financial reputation. Hedging sentiment in the market has rapidly increased, with gold and silver prices hitting all-time highs, and the U.S. dollar index weakening in the short term.

For the crypto market, the credibility of the dollar system is under attack, further reinforcing Bitcoin's narrative as a "decentralized safe-haven asset." In the short term, this is beneficial for mainstream crypto assets like BTC to attract capital inflows, but it also means market volatility could increase.

#美联储 #Jerome Powell #央行独立性 #Dollar Swap #去美元化 #Bitcoin #加密货币 #Gold #白银 #Global Financial