Treasury Secretary Bessent appeared before the House Financial Services Panel on Wednesday and stressed that Federal Reserve independence remains a cornerstone of effective monetary policy.
In his testimony, Bessent said the Fed must preserve a "very delicate balance" as it carries out its dual mandate. He warned that when the central bank "delves to other areas, impinges independence" - language emphasizing his concern about the institution stepping beyond its core responsibilities.
Addressing public confidence in the central bank, Bessent conceded the Fed "lost people’s trust when inflation ravaged nation," while simultaneously reiterating his support for both the Fed's independence and its accountability.
On the subject of financial regulation, Bessent urged caution. He argued against the pursuit of a "zero-risk financial system," framing such an objective as impractical, but he was equally clear that he is "not pursuing financial deregulation at any cost."
During questioning from lawmakers, the Treasury secretary voiced backing for policies aimed at preventing runs on small banks during times of stress. His remarks came in response to inquiries about proposals for deposit-insurance arrangements targeted at smaller banks, and signaled a willingness to consider measures that would limit deposit flight in crisis scenarios.
Bessent also pointed to the potential importance of stablecoins for the U.S. government’s financing toolkit, suggesting digital assets could play a role in certain Treasury operations. He did not provide operational details in the session, but raised the idea as a possible area of interest for government financing.
On currency policy, Bessent reiterated the administration’s stance, stating "we always support a strong dollar policy."
The testimony combined assurances about institutional independence with a pragmatic stance on financial stability and potential innovation in government financing. Bessent balanced calls for accountability with warnings against unrealistic regulatory goals, while highlighting specific concerns for small-bank deposit stability and the emerging role of digital assets.