Dollar will remain as global reserve currency: Quarles

The dollar’s status as a global reserve currency is unlikely to be threatened by a foreign central bank digital currency (CBDC) and any proposal to create a digital dollar issued by the Federal Reserve (Fed). it must be subject to careful scrutiny, said Fed vice president of supervision Randal Quarles.

The vice president argued, at the annual convention of the Utah Bankers Association, that the central bank of the United States (EU) should study the pros and cons of potentially creating an official digital currency, a process that the entity is carrying out now.

However, he noted that any proposal to create a US central bank digital currency, or CBDC, must exceed “high standards.”

“Before we get carried away by the novelty, I think we need to subject the promises of a CBDC to careful critical scrutiny,” Quarles said.

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

Quarles also commented that the dollar is already “highly digitized” and expressed skepticism that a CBDC will help improve financial inclusion or reduce banking costs. Some of those problems may be better addressed with other solutions, such as broader access to low-cost bank accounts.

A Fed-issued CBDC could also hamper financial innovation in the private sector and pose a threat to the banking system, which relies on deposits to issue loans, he said.

The Fed will publish a discussion paper this summer on the benefits and costs of a CBDC and the Boston regional arm of the central bank is investigating together with the Massachusetts Institute of Technology on technology that could be used for a digital currency.

UK says ‘no’

On the other hand, a growing number of crypto companies are abandoning their attempts to register with the British financial regulator, as global scrutiny of this fast-growing sector intensifies.

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The Financial Conduct Authority (FCA) banned Binance, one of the world’s largest cryptocurrency platforms, from any regulated activity in the UK on Friday, as regulators around the world tighten oversight of the sector. of cryptocurrencies.

Data on registrations shows that the number that has been abandoned has skyrocketed by a quarter in less than a month, an FCA spokesperson noted, adding that Binance withdrew its application in mid-May.

Since January, cryptocurrency-related businesses have had to register with the FCA, which oversees compliance with laws designed to prevent money laundering and terrorist financing.

Only six companies have registered, and dozens more are being evaluated, but are not yet deemed “fit and proper.” About 64 have withdrawn their applications, according to the spokesperson, up from 51 in early June.

For its part, a Binance spokesperson declined to comment, however, said it was working closely with regulators and law enforcement agencies “to promote safety and sustainability in the industry, while providing the best services and protection to our customers. users ”.

Regulatory bodies’ concern over cryptocurrencies like bitcoin includes their possible use for money laundering and other illegal activities, as well as risks to consumers.

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