- Foreign CBDCs and stablecoins don’t threaten the US$, says Fed vice-chair.
- He also believes Bitcoin is not a threat as it lacks mainstream support.
- However, he believes that a dollar-pegged digital currency would support the fiat.
The vice-chair of supervision of the Federal Reserve Board of Governors Randal Quarles made the comments at the annual Utah Bankers Association Convention on Monday. Quarles also talked about the size of the US economy and the country’s strong trade partnerships. He stated that these provide a strong backing for the dollar’s position.
As such, the Fed official believes even foreign-issued digital currencies are no threat to the top fiat currency. Quarles also noted,
It is inevitable that as the global economy and financial system continue to evolve, some foreign currencies (including some foreign CBCDs) will be used more in international transactions than they currently are. It seems unlikely, however, that the dollar’s status as a global reserve currency or the dollar’s role as the dominant currency in international financial transactions will be threatened by a foreign CBDC.
He also acknowledged that a US$ stablecoin would support its fiat counterpart by making cross-border payments faster and cheaper. Adding that the existence of digital currencies fuels innovation. However, he went on to show disdain for popular crypto bitcoin. Quarles claimed the top crypto is no threat as it has failed to gain mainstream adoption.
Prior, Jerome Powell, Federal Reserve chair, shared that they are looking into the impact of CBDCs and their impact and will publish a report based on their findings. As such, the US will join countries like the UK in exploring stablecoin and CBDC use. In fact, Bank of England recently published a report on the topic.
At the same time, the has been a growing recognition of crypto as a store of value. Specifically, Mexican billionaire Ricardo Salinas Pliego. recently called fiat fraus and expressed an intent to add crypto to his bank. Crypto analyst Lark Davis went on to predict that bitcoin price will spike over 15 times to challenge gold. As such, it seems the scope of use for digital currencies far exceeds being an alternative currency.
Finally, China is already in its final stages of testing its digital yuan and could soon be the first country to have a functional CBDC.