The Federal Reserve Board of Governors Vice Chair for supervision, Randal Quarles, believes that neither dollar-pegged Stablecoins nor digital currencies issued by other central banks are likely to be substantial sources of worry for the U.S. currency. Quarles said foreign currencies, whether fiat or digital, would be unlikely to challenge the dollar’s role in the global economy in a prepared statement for the Annual Utah Bankers Association Convention on Monday.
He highlighted the U.S. economy’s size, trade links with other countries, and reliable U.S. monetary policy as reasons for believing that even a central bank digital currency, or CBDC, created abroad would pose little risk. Quarles added, “It’s inevitable that, as the global economy and financial system continue to evolve, some foreign currencies (including some foreign CBDCs) will be used more in international transactions than they currently are.”
Quarles’ comments on stable coins tethered to the U.S. dollar lacked urgency, as well. According to the Fed vice-chair, although there is a legitimate and substantial regulatory interest in how Stablecoins are designed and administered, a U.S. dollar stablecoin might support its fiat counterpart by making cross-border transfers faster and cheaper.
According to Quarles, concerns with Stablecoins, such as holders exchanging a large number of coins at once, are “eminently addressable,” according to Quarles. Even Bitcoin (BTC), which he described as “a risky and speculative investment rather than a revolutionary form of payment,” is unlikely to impact the dollar’s position because the crypto asset has yet to gain widespread acceptance.Rather than advocating for a CBDC issued by the Federal Reserve, Quarles suggested that a government-issued digital currency would hinder private-sector innovation and perhaps limit access to credit and many commercial bank services.