Randal Quarles – the chair of the Financial Stability Board and U.S. Federal Reserve governor – believes that nobody is taking bitcoin and other cryptocurrencies seriously enough, which could potentially bear harsh consequences for the world’s many banks.
Randal Quarles – People Need to Wake Up When It Comes to Crypto
Quarles points to things like Libra and says that this cryptocurrency and others like it are signs that the financial space has changed extraordinarily over the past year alone. Strangely, he doesn’t feel that anybody is waking up to these changes and thus won’t be prepared for the harsh realities that are about to strike.
Technology is changing the nature of traditional finance, bringing innovations that create both potential benefits and risks. Rapid progress may bring about new challenges.
Libra is a controversial new stable currency that was first introduced by Facebook in June of last year. The currency has hit a nerve with virtually everyone, and several aren’t comfortable with the project given its being released by a company that has been drowned in scandal for the past few years. If Facebook couldn’t keep people’s private data secure, how will it keep people’s financial information under lock and key?
But Quarles, despite pointing specifically at Libra, says it’s not really the coin itself that worries him, but rather the properties of crypto and blockchain – specifically other stable currencies that have popped up. In an interview, he comments:
Financial stability board members recognize the speed of innovation in the area of digital payments, including so-called stable coins. We are resolved to quicken the pace of developing the necessary regulatory and supervisory responses to these new instruments.
He is referring to the lack of regulation in play designed to monitor and govern the activities surrounding stable coins and other forms of crypto. He’s concerned that lawmakers simply haven’t done enough to keep them in check, and as more and more people grow comfortable using them, there won’t be enough rules in play designed to protect them or prevent illicit activity in the future.
You Just Can’t Use It!
One of the big problems we’ve been seeing is that certain countries, rather than taking the necessary time to learn more about crypto and understand how is works or where it comes from, are simply implementing barricades designed to prevent people from using them altogether. Countries like France, Germany and Italy, for example, have all sworn to initiate new statutes that will prevent Libra from working within their borders once it becomes available to the public.
The primary concern here is that entities like Libra could potentially undermine their economies and bring irreparable damage to their financial infrastructures, thereby causing their national currencies to suffer or fall.