Randal Quarles, former vice-chair of supervision at the United States Federal Reserve, spoke about central bank digital currencies and the likelihood that the U.S. will adopt such technology in an interview with “Banking With Interest” on Tuesday. Quarles, who is well-known for his opposition to the CBDC, voiced his doubts about the digital dollar and predicted that the U.S. would not adopt it.
Quarles was a Fed official from 2017 to 2021. He said that a closer analysis of CBDCs would reveal that their benefits are “extremely marginal,” if any.
“You will need an account at the bank to access your money. […] also needs a cellphone and wireless internet. All this makes inclusion more difficult.”
He said that using a CBDC to exempt the bank’s role would be “pathological.”
Quarles stated that opinions regarding CBDCs vary within the Fed. However, he lamented the tendency to follow in the footsteps of other countries just for the sake. Quarles did not believe a bill authorizing CBDCs could pass Congress. The public would react negatively to the idea once it was more widely discussed. He noted that “a coterie […] of conservative Republicans are concerned about this issue. But they’re more worried we’re falling behind China.”
Quarles was a strong advocate for stablecoins in international transactions. He stated that “we tend to lose” when U.S.-run entities like the e-yuan compete with private sector innovation. He argued that a CBDC would make stablecoins less attractive.
“Why would you invest so much effort in developing a […] stablecoin payments system if you know the Fed will just bigfoot you out to extinction?”
Related: The US Congress looks at e-cash to replace CBDC
Quarles, a former Ripple advisor, said that he would give his successor as Fed vice chair any advice. This was in preparation to explain to political supporters why they won’t get everything they want.