BREAKDOWN: Federal Reserve Vice Chair – ‘We Do Not Need to Fear Stablecoins’
CoinDesk Podcast Network
CoinDesk
4.8 • 689 Ratings
🗓️ 14 July 2021
⏱️ 20 minutes
🧾️ Download transcript
Summary
While the European Central Bank accelerates its digital euro project, one Fed official throws cold water on U.S. CBDC plans.
This episode is sponsored by NYDIG.
On this episode of “The Breakdown,” NLW analyzes a stablecoin-focused speech from Randal Quarles, vice chair of the Federal Reserve, starting with a primer on developing trends related to the topic, including:
- CBDC discussion, investigation and development across global powers
- The ability of stablecoins to make a U.S. CBDC redundant
The conversation around central bank digital currencies (CBDCs) is growing louder. In China, the digital yuan continues to roll out through lottery tests and, more recently, for use in the Beijing subway. Today, the European Central Bank announced a new two-year “investigation” period during which the ECB will prepare for a larger digital euro design phase with user consultation, regulatory discussions and market analysis.
Still, NLW argues that we can’t view the rise of public CBDC discussions in the absence of the growing adoption of private stablecoins. While these private, fiat-pegged stablecoins seem increasingly in the regulatory crosshairs, Federal Reserve Vice Chair Randal Quarles recently argued the U.S. central bank and policy makers shouldn’t fear them – and that, indeed, when regulated properly, stablecoins might make the need for a CBDC redundant.
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The Breakdown is written, produced by and features NLW, with editing by Rob Mitchell and additional production support by Eleanor Pahl. Adam B. Levine is our executive producer and our theme music is “Countdown” by Neon Beach. The music you heard today behind our sponsor is “Razor Red” by Sam Barsh. Image credit: Andrew Harrer/Bloomberg/Getty Images, modified by CoinDesk.
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Transcript
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| 0:00.0 | Welcome back to The Breakdown with me, NLW. |
| 0:09.0 | It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. |
| 0:16.2 | The breakdown is sponsored by Nidig and produced and distributed by CoinDesk. |
| 0:22.5 | What's going on, guys? It is Wednesday, July 14th, and today we are talking about quite a remarkable |
| 0:28.8 | speech on stable coins and central bank digital currencies from the vice chair of the Federal Reserve. |
| 0:35.8 | However, to set this up, we need to discuss a couple of trends that |
| 0:39.2 | are useful for contextualizing this discussion. The first is the increasing conversation around |
| 0:44.3 | central bank digital currencies. I don't need to go through everything again, but briefly, if you're |
| 0:49.0 | new to this topic, a CBDC is a new type of digital fiat money. Governments are interested in this for a variety of |
| 0:56.3 | reasons. There are potential efficiencies and cost gains. There could be reduced settlement times. |
| 1:02.4 | Some think that CBDCs could enable more of the unbanked and underbanked to access quality |
| 1:07.6 | financial services. Governments are also excited about the possibilities |
| 1:11.5 | of easier interactions with their citizens. The difficulty of distribution of COVID-19 aid was a major |
| 1:17.9 | motivator for people to start paying attention to CBDCs and was in fact the first time |
| 1:22.7 | many politicians had even considered them. This was especially true for Democrats in the |
| 1:26.8 | U.S. and for the European |
| 1:28.0 | establishment. There are also micro-monetary policy opportunities. CBDCs present a scalpel |
| 1:34.7 | compared to the hammer of current tools. And then there are surveillance opportunities, |
| 1:39.5 | which, in the well-heeled prim and proper Western world, are seen as exciting by officials as a way |
| 1:44.1 | to reduce financial crime and money laundering. In other parts of the world, less than the In the well-heeled prim and proper Western world are seen as exciting by officials as a way to |
| 1:44.3 | reduce financial crime and money laundering. In other parts of the world, less concerned with |
| 1:49.3 | citizen rights like privacy, the surveillance capacities are more generally appealing as an unabashed |
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