Key Fed Official Is Bullish on Stablecoins, Says it May Support Dollar’s Role in the Global Economy

2021-6-29 17:46

Randal Quarles, the Federal Reserve’s vice chair for supervision, gave a speech on digital money that reflects his bullish views on stablecoins, provided they can be regulated properly while being skeptical about the need for a central bank digital currency (CBDC).

“Stablecoins are an important development that raise difficult questions,” including how their widespread adoption would affect monetary policy or financial stability, commercial banking system, and if they represent a fundamental threat to the government's role in money creation.

“In my judgment, we do not need to fear stablecoins,” said Quarles at the 113th Annual Utah Bankers Association Convention, Sun Valley, Idaho.

He noted that the central bank has traditionally supported responsible private-sector innovation, and consistent with this tradition,

“we must take strong account of the potential benefits of stablecoins, including the possibility that a U.S. dollar stablecoin might support the role of the dollar in the global economy.”

As for the concern that stablecoins challenge our monetary sovereignty, it is “puzzling” because our existing system depends on private firms creating money every day, he said.

However, there is appropriately a strong regulatory interest in how these fiat-based cryptos are constructed and managed, he added.

The stability risk could arise if the stablecoin is invested in multiple currency denominations, is a fractional rather than full reserve, the pool is invested in illiquid instruments, and the holders don't have a clear claim on the underlying asset.

“When our concerns have been addressed, we should be saying yes to these products, rather than straining to find ways to say no,” said Quarles.

As for crypto assets like Bitcoin, according to Quarles, they seek to create value in the coin through other means like intrinsic mechanisms to ensure scarcity or anonymity and do not play a significant role in today's payments or monetary system.

As per him, unlike gold, which has industrial uses and aesthetic attributes, bitcoin's principal additional attractions are its novelty and its anonymity, and while anonymity will make it the target for increasingly comprehensive scrutiny from law enforcement, the novelty is a rapidly wasting asset.

“Bitcoin and its ilk will, accordingly, almost certainly remain a risky and speculative investment rather than a revolutionary means of payment, and they are therefore highly unlikely to affect the role of the U.S. dollar,” said Quarles.

Besides stablecoins and crypto-assets not being a threat to the financial system and as such do not require a response with a CBDC, Quarles said already the general public transact mostly in digital dollars.

Also, the Fed and private-sector interbank payment services already offer an array of options that facilitate efficient, electronic US dollar payments.

Overall, the US dollar payment system is “very good, and it is getting better,” and the potential benefits of a CBDC are unclear, and it could pose considerable risks, he concluded.

The post Key Fed Official Is Bullish on Stablecoins, Says it May Support Dollar’s Role in the Global Economy first appeared on BitcoinExchangeGuide.

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potential stablecoins → Результатов: 58


Federal Reserve Is Moving Forward with its Digital Dollar Plan; Starting with Publishing a Paper on CBDC

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Индикатор от Glassnode указывает на бычий рост биткоина

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Messari: Tether (USDT) Likely to Surpass Bitcoin as the Dominant Cryptocurrency

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2020-7-22 13:00


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Visa CEO Recognizes Real Potential in Stablecoins and Cryptocurrencies

In a question and answer session at the JP Morgan Annual Tech Conference, the head of Visa admitted that cryptocurrencies are complementary to its current payment systems — not competitive. Ryan Todd (@_RJTodd), who reported on Visa’s acknowledgment of digital currencies, added that the total stablecoin value has hit ten billion dollars last week.

2020-5-18 09:36


World Economic Forum States That Stablecoins Could Temper US Dollar Domination Risk

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2019-11-29 23:13


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Libra Roundup: G7 Voice Concerns, Senator Adds Support, New Study Emerges

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Libra Association stresses on cooperation as G7 releases report on stablecoins

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2019-10-18 11:30


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Crypto Isn’t Sound Money, Says Swiss Central Bank Official

Swiss central bank official Thomas Jordan says crypto isn’t sound money but stablecoins have the potential to see widespread adoption. Crypto Won’t See Mainstream Adoption Speaking during a recent event at the University of Basel, Jordan — chairman of the governing board of the Swiss National Bank (SNB), argued against the value proposition of crypto as currencies.

2019-9-19 17:00


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Is it the Year of the Stablecoin?

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2018-11-15 22:10