Fed Oversight Vice Chairman: CBDCs and stablecoins are unlikely to threaten the position of the US dollar

Randal Quarles, vice chairman of the United States Federal Reserve Board of Governors (Fed), believes that both dollar-pegged stablecoins and those held by the country’s central banks (CBDC) are not the main source of concern are US dollars.

Riot Quarles – Vice Chairman of the Fed’s Board of Directors

In a statement prepared for the Utah Bankers Association’s annual meeting on Monday June 28, Quarles said say Foreign currency – whether fiat or digital – is unlikely to question the role of the US dollar in the global economy.

Quarles cites the size of the US economy, trade relations with other countries, and reliable US monetary policy as reasons that, in his opinion, even a foreign CBDC carries very little risk.

“It is inevitable that as the world economy and financial system evolves, some foreign currencies (including some foreign CBDCs) will be used more heavily than they are in international transactions. . However, it seems unlikely that the dollar’s position as a global reserve currency or the dollar’s role as the dominant currency in international financial transactions will be jeopardized by foreign CBDCs ”.

Regarding stablecoins pegged to the US dollar, Quarles said that there is “a legitimate and strong legal concern about how they are minted and regulated,” a US dollar-pegged stablecoin could aid the counterparty, by making cross-border payments faster and cheaper.

Quarles said concerns about stablecoins – especially those who hold large numbers of them at the same time – can “clearly be allayed.” Even Bitcoin, which he describes as “a risky and speculative investment rather than a revolutionary means of payment,” is less likely to affect the role of the US dollar as it has not become a generally accepted means of payment.

Rather than encouraging this, however, Quarles suggested that a Fed-issued CBDC would discourage private sector innovation and hamper commercial banks’ ability to provide credit and many services.

“The potential benefits of a Fed CBDC are unclear. I believe that developing a CBDC can be a huge risk. “

In May, Fed Chairman Jerome Powell said he would release a document this summer to investigate the implementation of the CBDC. Powell has spoken repeatedly about the potential impact of the US government issuing a CBDC, believing it is important “to get it right, rather than be the first”.

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According to Cointelegraph

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