Randal K. Quarles, Fed’s Vice Chairman of Supervision and Chairman of the Financial Stability Board (FSB), expressed doubts about the benefits of the digital dollar, but said it “may pose a significant and specific risk to the U.S. banking system.”
Fed vice chairman is skeptical of digital dollars
Randal Quarles, Vice Chairman of Fed Regulation, spoke about Bitcoin and the Federal Reserve’s work on the central bank digital currency (CBDC) digital dollar in a speech at the Utah Bankers Association on Monday. Quarles is also the chairman of the Financial Stability Board (FSB). He says:
The potential benefits of the Federal Reserve CBDC are unclear. On the contrary, the Fed CBDC may bring significant and specific risks.
Then he outlined the risks. “First, the Federal Reserve CBDC may pose considerable challenges to our banking system… The Fed’s replacement of commercial banks as the main funding arrangement for the public may limit the availability of credit, fundamentally change the economy, and make The public faces a series of unexpected and undesirable consequences.”
Quarles further added that “the dominant CBDC may undermine the consumer and other economic benefits of commercial banks competing to attract customers.” “The Federal Reserve CBDC may also become an attractive target for cyber attacks and other security threats.”
Quarles believes that there is no real threat to the dollar. Speaking of threats, he said, “Gold will always shine, but by definition, the freshness will gradually disappear.” The Federal Reserve’s vice chairman in charge of oversight pointed out that he believes that cryptocurrencies such as Bitcoin are almost non-threatening:
Therefore, Bitcoin and similar products will almost certainly remain a risky speculative investment, rather than a revolutionary payment method, so they are extremely unlikely to affect the role of the US dollar or require CBDC to respond.
In short, Quarles said that “the U.S. dollar payment system is very good, and it is getting better” and emphasized that “the potential benefits of the Federal Reserve CBDC are unclear.” “I think the development of a CBDC may bring considerable risks.”
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