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Principale » Fed's Quarles says digital currencies pose financial stability risks

Fed's Quarles says digital currencies pose financial stability risks

30 Novembre 2017

Since the valuation with cryptocurrency continues to grow, Federal Reserve evidently is giving consideration to creating a product or service such as bitcoin of its own. He also said that the USA banking system lacks the technology necessary to make real-time digital currency changes happen with the regularity needed to run an economy.

One novel feature of blockchain-based systems is that they eliminate the middle-men, or financial institutions, from transactions.

"While these digital currencies may not pose major concerns at their current levels of use, more serious financial stability issues may result if they achieve wide-scale usage".

The underlying technology that powers digital currency remains more interesting to the Federal Reserve than the development of digital currency, according to comments made by John Williams, president of the San Francisco Federal Reserve Bank. Just a day after hitting $10,000, it eclipsed the $11,000 mark.

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Quarles cautioned that without that critical backing and institutional support, "it is not clear" how a digital currency payment system would function "in times of stress".

"I am particularly concerned that a central-bank-issued digital currency that's held widely around the globe could be the subject of serious cyberattacks and could be widely used in money laundering and terrorist financing", Quarles said.

"I believe the financial industry is increasingly recognizing that we should separate the concept of digital currencies from the innovative new technologies that they have employed to transfer assets", Quarles said.

While supportive of continued research into digital currency issues, he argued near-term efforts should focus on improving the way payments are processed in the existing banking system.

Fed's Quarles says digital currencies pose financial stability risks