Fed vice chairman Quarles says the digital dollar could pose significant risks to the US banking system – regulating Bitcoin News

Federal Reserve vice chairman of the oversight and financial stability board (FSB) chairman Randal K. Quarles questions the benefits of the digital dollar but says it could pose “significant and tangible risks” to the US banking system.

Fed vice chairman raises concerns about the digital dollar

Randal Quarles, Vice Chairman of the Federal Reserve, spoke in a speech to the Utah Bankers Association on Monday about Bitcoin and the Fed’s work on a central bank digital currency (CBDC), the digital dollar. Quarles is also the chairman of the Financial Stability Board (FSB). He said:

The potential benefits of a Federal Reserve CBDC are unclear. Conversely, a Federal Reserve CBDC could pose significant and tangible risks.

Then he outlined the risks. “First, a Federal Reserve CBDC could pose significant structural challenges to our banking system … An arrangement whereby the Federal Reserve replaces commercial banks as the dominant funder for the general public could reduce the availability of credit, transform the economy, and expose the public to a variety of unexpected and undesirable consequences. “

Quarles added that “a dominant CBDC could undermine the consumer and other economic benefits that result when commercial banks compete for customer acquisition” and “a Federal Reserve CBDC could also be an attractive target for cyberattacks and other security threats”.

Quarles doesn’t think there is any real threat to the US dollar. Regarding threats, he said, “Gold will always shine, but novelty by definition fades.” The Federal Reserve vice chairman noted that he sees little threat from cryptocurrencies like Bitcoin:

Bitcoin and its ilk will therefore almost certainly remain a risky and speculative investment rather than a revolutionary means of payment, and are therefore very unlikely to affect the role of the US dollar or require a response with a CBDC.

In closing, Quarles said, “The US dollar payment system is very good and is getting better,” stressing that “the potential benefits of a Federal Reserve CBDC are unclear” and “I believe that the development of a CBDC could involve significant risks . ”

What do you think of Quarles’ comments? Let us know in the comment section below.

Photo credits: Shutterstock, Pixabay, Wiki Commons

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