Ex-Fed Vice Chairman Quarles has not lost his passion for opposing the US-CBDC

Randal Quarles, former Federal Reserve Vice Chairman for Oversight, discussed central bank digital currencies (CBDC) and the chances of the U.S. adopting such technology in an interview on Tuesday’s Banking With Interest podcast. Quarles, known for his opposition to a CBDC, expressed skepticism about the so-called digital dollar and predicted that the US will not adopt it.

Quarles, who worked at the Fed from 2017 to 2021, said close analysis of CBDCs would show their benefits are “extremely marginal, if they exist at all.” He saw no potential for CBDCs in promoting financial inclusion and commented:

“You’re going to need an account at the bank, like you need to use money now, and beyond […] a cell phone and wifi, and all of that makes inclusion harder.”

Using a CBDC to eliminate the bank’s role would be “pathological,” he added.

Quarles said opinions on CBDCs varied within the Fed, but he bemoaned an attitude of following in other nations’ footsteps just for the sake of it. He didn’t think a bill approving a CBDC could pass Congress, as the public would react negatively to the idea once it received broader attention. Nonetheless, he noted, “a clique of politicians […] Many of them are conservative Republicans, who might be expected to be concerned about this issue, but are more concerned that we are falling behind China.”

Quarles was bullish on stablecoins for international transactions, saying “we tend to win” when US private-sector innovation competes with state-owned companies like the e-yuan. A CBDC would make stablecoins less attractive, he argued, asking:

“Why do you put so much effort into developing one […] Stablecoin payments system when the Fed just wants to dump you?”

Related: Fitting the bill: US Congress considers e-cash as an alternative to CBDC

When asked if he had any advice for his proposed successor as Fed Vice Chair, former Ripple adviser Michael Barr, Quarles said, “Make your decisions as technocratic as possible” in preparation for serving up political supporters to explain why they won’t get everything they want to get.