Federal Reserve Vice Chair Randal Quarles said at a bankers conference in Utah on Monday the U.S. should find ways to say “yes” to stablecoins.
The speech was in sharp contrast to recent comments from other Fed officials, such as Federal Reserve Governor Lael Brainard, who have warned stablecoins could pose a risk to consumers and businesses. Speaking at the 21 Utah Bankers Association Annual Convention, Quarles added that the U.S. central bank has a “strong regulatory interest” in stablecoins but also said there is no need to fear them.
“When our concerns have been addressed, we should be saying yes to these products, rather than straining to find ways to say no,” Quarles said. “Indeed, the combination of imminent improvements in the existing payments system such as various instant payments initiatives combined with the cross-border efficiency of properly structured stablecoins could well make superfluous any effort to develop” a central bank digital currency.
Among the concerns Quarles highlighted was the possibility stablecoins that were fractional rather than fully reserved could create a “run risk” for consumers. Last week, Eric Rosengren, president of the Federal Reserve Bank of Boston, listed tether among the “financial stability challenges” the Fed is watching.
Quarles also downplayed bitcoin and foreign CBDCs as potential threats to the U.S. dollar.
