Banking Exchange Magazine Logo

Fed Official Casts Doubt on Digital Dollar

Randal Quarles “skeptical” of the proposed benefits of a Federal Reserve-backed digital currency

  • |
  • Written by  Banking Exchange staff
  • |
  • Comments:   DISQUS_COMMENTS
Fed Official Casts Doubt on Digital Dollar

Any cryptocurrency backed by the Federal Reserve must be subjected to a “careful critical analysis” of the proposed benefits, according to the Fed’s vice chair for supervision Randal Quarles.

Quarles expressed his skepticism of a proposed central bank digital currency (CBDC) in his speech at the Annual Utah Bankers Association Convention earlier this month. He questioned whether a ‘digital dollar’ would safeguard the position of the US dollar on the global economic stage, and address inequalities within American society.

“As we begin our Fed analysis of these issues, I will have to be convinced that a CBDC is a particularly good tool to address either of these issues, about which I am skeptical, and I will especially have to be convinced that the potential benefits of developing a Federal Reserve CBDC outweigh the potential risks,” he said.

Earlier this month, the American Bankers Association warned that advocates of a CBDC focused too much on the benefits of adoption and downplayed the potential risks to both consumers and the US financial system.

In his speech, Quarles scrutinized the argument that the emergence of foreign digital currencies would threaten the position of the US dollar. He also questioned mounting concern over stablecoins, and the idea that a CBDC is required to compete with them.

He suggested private digital currencies like stablecoins have several benefits.

“A global US dollar stablecoin network could encourage use of the dollar by making cross-border payments faster and cheaper, and it potentially could be deployed much faster and with fewer downsides than a CBDC,” he said.

Quarles also proposed that making improvements to other existing payments systems, such as instant payments initiatives, might be an alternative to developing a CBDC, which involves extensive risk and cost factors.

On the topic of financial inclusion, Quarles encouraged making cheap, basic commercial bank accounts more accessible. He highlighted the Bank On initiative as an act to follow.

back to top


About Us

Connect With Us


Webinar: In-person and Remote Banking –
Why this Hybrid Model is the Future of the Branch

Banks combine the brick and mortar
physical banking experience with virtual banking

Time/Date: August 5th, 2021 2:00 P.M. ET

As consumers increasingly prefer to engage with their bank remotely instead of going to a branch location, institutions are looking to modernize the ways in which they interact with customers. Depending on the complexity of the banking activity, some consumers will use self-service digital channels while others will turn to channels where they can get human help. In a hybrid banking model, banks combine the brick and mortar physical banking experience with virtual banking.

In this webinar, OneSpan and guest speaker Alyson Clarke, Principal Analyst at Forrester Research, will discuss why hybrid banking will become mainstream and the importance of putting the right tools in place to support remote account opening, account maintenance, wealth management, and lending.


This webinar is brought to you by:
OneSpan Logo