Federal Reserve board member Randal Quarles said on Wednesday he does not understand the reasoning behind the issuance of a central bank digital currency (CBDC).
He made his remarks at the annual Milken Institute Global Conference, which assembles public- and private-sector leaders.
Quarles, who until Oct. 13 was the Federal Reserve’s top financial regulator, said he doesn’t understand devoting “the enormous amount of resources and the technological risk and the significant disruption to the current operation of the financial system that would come from the central bank saying we are going to provide this digital currency.”
He was also not clear about how a CBDC could address financial inclusivity concerns, as its supporters maintain.
Quarles, who also chairs the Financial Stability Board, an international agency that tracks global financial trends, has been receptive to the potential role of stablecoins but his latest remarks echoed concerns he has voiced before about a CBDC.
In a speech at the Utah Bankers Association Convention in June, Quarles said he was “puzzled how a Federal Reserve CBDC could promote innovation in a way that a private-sector stablecoin or other new payment mechanism could not.” He expressed concerns that such a digital currency could “deter private-sector innovation, would be difficult and costly to manage and create “an appealing target for cyberattacks and other security threats.”
In his Milken conference remarks, Quarles said that “there are potential financial risks to the structure of some digital assets that need to be addressed.” But he added that “they were addressable” and that it was important “to address them very quickly so we have a level playing field on which that type of innovation can continue to develop.”