U.S. Federal Reserve Vice Chair for Supervision Randal K. Quarles called the global rush to roll out central bank digital currencies (CBDC) akin to the 1980s parachute pants fad and FOMO, or the “fear of missing out.”
Quarles pointed to the country’s occasional love affair with “deluded crazes” like the 1980s parachute pants, calling it parallel to the world’s knee-jerk infatuation with digital currencies, the New York Times (NYT) reported on Monday (June 28).
“But the consequences can also be more serious,” Quarles said during remarks at the annual Utah Bankers Association Convention, which was held in person, per the NYT.
Quarles further said that before a U.S. CBDC can move forward, the benefits should clearly outweigh any potential risks.
“Before we get carried away with the novelty, I think we need to subject the promises of a CBDC to a careful critical analysis,” he said in his remarks.
A discussion paper about the pros and cons of a U.S. CBDC is scheduled for release sometime over the summer, according to the Fed, per the remarks. A research collaboration with the Fed’s Boston regional division and the Massachusetts Institute of Technology will drill down into the necessary technology for CBDCs.
“We already have a digital currency in this country, it’s called the dollar,” Thomas Barkin, president of the Richmond Fed Bank speaking at the Rotary Club of Atlanta, according to Reuters on Monday (June 28).
Barkin pointed to the many transactions that are already done virtually via Venmo and others. “We ought to have a sense of what are we trying to accomplish when we do it,” Barkin said, per Reuters.
The debates over CBDCs hit the Senate floor earlier this month with U.S. Sen. Elizabeth Warren, Massachusetts, calling cryptocurrencies a “lousy way to buy and sell things.” She also pointed out that the value of cryptos fluctuates “wildly” unlike the dollar.
Companies in the business of cryptocurrency must satisfy numerous regulations and mandates, making the bar to entry high for newcomers. The requirements have also created roadblocks that can make it hard for businesses to get financial backing.
