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Federal Reserve Vice Chairman: Encryption Monetary threatens financial stability, central bank digital currency should not be introduced too fast

According to foreign media reports, Randal Quarles, vice chairman of the Federal Reserve Board, said that with the popularization of digital currencies, it may pose a threat to financial stability.

On Thursday, at the 2017 Financial Stability and Financial Technology Conference, Quarles warned of the rise of cryptocurrencies, saying that private-to-central currencies could grow for the broader financial system if they grew too large "Spillover Effect".

Quarles mentioned that the volatility of cryptocurrencies and the fact that they are not supported by any institutions or physical assets make it difficult to control them, which means that at this stage we do not know what will happen in an emergency.

In Quarce's speech, he mentioned:

"Risk management can be a moderator, but how a central payment system asset can not be converted to a dollar at a constant exchange rate, the resulting price risk and potential liquidity and credit risk for the system will be A big challenge. "
He explained that "it is unclear whether these payment systems can play a role under the tremendous pressure."


Fed currency? Progress will be slow

He also mentioned that there will be a great deal of review and negotiation before any central bank issues its own cryptocurrencies, especially those with high cash utilization rates.

Quarles warned that launching the central bank's digital currency too quickly could frighten residents and cause economic activity to drop, deploying any unproven technology that could lead to other problems.

Although Quarles remains cautious about the federalization of cryptocurrencies, he also supports digital currency as a "safety-limited purpose" tool for the settlement process.

He also suggested that further research on cryptocurrency applications is necessary.