The FED considers digital currencies a risk that will not solve financial problems

For Randal Quarles, a senior Fed official, “the fever for cryptocurrencies” has to do with the enthusiasm that the United States has had for centuries for news and fashions

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The vice president of the Federal Reserve, Randal Quarles, spoke of cryptocurrencies and money referring to them as “an unfortunate and passing fad” , so he warned about the risks involved and how little it can actually do to improve the current financial system.

Quarles, at the Utah Bankers Association Annual Convention, adds that the popularity of everything digital is closely related to the fact that in the United States there has always been an extreme enthusiasm for novelty , but there is an implicit risk when that enthusiasm is combined with the desire not to miss anything that the American has until the point of overriding your critical thinking.

For this Fed official, both cryptocurrencies and central bank digital currencies can generate risks in the economy of a country and an individual. And in the end it doesn’t even solve any problem in the financial system.

Maybe that’s one of the many reasons why there is still skepticism in the creation of a CBDC by the central bank of the United States. “You should try to appease that kind of enthusiasm,” said Quarles.

This enthusiasm has even been compared to a fashion in the way of dressing and that when you see it later, it is sad. In this case, what happens is worse because we are talking about a currency, whose use and then confusion is much more risky.

“I think we need to subject the promises of a CBDC to a careful critical analysis,” says Quarles that it is better before the curiosity for the novelty conquers us.

In this regard, the first quarter of the year it was known that the Fed was working in a project on a digital dollar, that intended to have a platform with greater processing than a cryptocurrency.

From this bill of the “dollar digital “, it was said at the time that was proposed by the Democrats and was defined as a” unit of value electronic ”that would be financed by the Federal Reserve of the United States . Definitely a CBDc will impact the cryptocurrency and blockchain industry.

In this sense, the vice president of the Federal Reserve, today insists on the necessary evaluation of the potentials costs and security risks involved in having an official digital dollar.

Here Quarles refers to the risk of cyberattacks and other security threats, as well as the possibility that is used for other illegal activities such as money laundering.

For all these reasons, the chances are low that the dollar’s status as the global reserve currency will be threatened by a central bank digital currency (CBDC) ; and for the creation of a digital currency by the US central bank to be carried out, “high standards” must be exceeded, as stated by Randal Quarles.

“I will have to be especially convinced that the potential benefits of developing a Federal Reserve CBDC outweigh potential risks ”, emphasized the official.