Federal Reserve vice chair of supervision Randal Quarles took a cautious tone on the central bank’s efforts to establish a digital version of the US dollar, saying the race to issue one ahead of other major economies can’t take priority over getting it right.
Quarles told SIFMA’s Annual Meeting there is a strong case to be made for the US issuing a central bank digital currency to maintain the dollar’s place as the top universal medium of exchange in global finance. But a range of potential issues must be fully examined, he said, including national security risks.
“The susceptibility of central bank digital currency to some form of cyber interference is something we have to make sure we understand and that we’re confident about,” Quarles said.
Such a move could also have implications for financial stability during periods of stress by disrupting flows from other types of assets at both the institutional and individual levels, he said.
“You could imagine that as perhaps adding to financial instability in a period of stress if it was easier to leave other forms of short-term assets for cash and for central bank cash, and for that not just to be a wholesale phenomenon but a broad retail phenomenon,” Quarles said.
Raed more: https://www.smartbrief.com/original/2020/10/quarles-getting-cbdc-right-more-important-being-first-0