March 29, 2024

Fed vice chairman questioned the benefits of digital dollar

Randal Quarles says the outlook for a national digital currency (CBDC) is unclear.

Vice Chairman of the Federal ReserveRandal Quarles said he doubtedthe feasibility of creating a digital dollar, as he is skeptical about the benefits attributed to national digital currencies (CBDCs). According to the vice head of the Federal Reserve System, one of the main disadvantages of the digital dollar is the use of CBDCs bypassing traditional banks. If the Fed does issue the digital dollar, consumers who benefit from banking competition could suffer as a result, Quarles said.

“The potential benefits of the Fed's CBDC are unclear. On the contrary, CBDC can pose significant and completely unambiguous risks, ”the official said.

Quarles also recalled the possibility of cyber attacks ona system that ensures the functionality of the digital dollar. According to him, a system that would be as secure as possible from attackers would be very difficult to design.

In March, Fed Chairman Jerome Powell argued thatthe regulator has just begun to form the concept of the digital dollar and does not plan to undermine the work of the private financial sector. The creation of a fully digital dollar will only be possible with the full support of Congress, he said.

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