Former Vice President of Supervision of the United States Federal Reserve, Randal Quarles discussed central bank digital currencies (CBDCs) and the prospects of the United States adopting such technology in an interview with the “Banking With Interest” podcast on Tuesday. Quarles, known for his opposition to a CBDC, expressed skepticism about the so-called digital dollar and predicted that the United States will not introduce it.
Quarles, who served at the Fed from 2017 to 2021, he said that a detailed analysis of CBDCs would show that their advantages are “extremely marginal, if they exist at all.” He did not see the potential of CBDCs to promote financial inclusion, commenting:
“You’re going to need a bank account, the way you need to use money now, and besides […] a mobile phone and wireless access, and all of that is making inclusion difficult.
Using a CBDC to exclude the role of the bank would be “pathological”, he added.
Quarles said views on CBDCs differ within the Federal Reserve, but he lamented the attitude of following in other countries’ footsteps just for the sake of doing so. He does not believe that a bill authorizing a CBDC could pass Congress, as the public would react unfavorably to the idea once it received broader attention. However, he noted, “a clique of politicians […] A lot of them conservative Republicans, who might be expected to be concerned about this issue, but are more concerned that we’re falling behind on China.”
Quarles favored stablecoins for international transactions, stating that “we tend to win” when US private sector innovation competes with state entities, like the digital yuan. A CBDC would make stablecoins less attractive, he reasoned, asking:
“Why are you going to invest so much effort in developing a stablecoin payment system? […] if the Federal Reserve is just going to eliminate it?”
When asked if he had any advice for his proposed successor as Fed Vice Chairman, former Ripple adviser Michael Barr, Quarles said: “Make your decisions as technocratic as possible,” preparing to explain to your political supporters why they won’t get everything they want.
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