July 31, 2021

Digital-dollar fad: The Fed isn’t obliged to issue electronic currency

Is the idea of a digital dollar just a fad — like the 1980s craze with parachute pants that became synonymous with Michael Jackson and MC Hammer?

Randal Quarles, the Federal Reserve’s vice chair for supervision, recently used that very imagery to express his scepticism. He wasn’t trying to prejudge the monetary authority’s thinking, which will soon be outlined in an eagerly awaited discussion paper on a so-called FedCoin. But speaking for himself, Quarles isn’t convinced that the Fed should have to issue its own electronic money to the public even if other do so. My interpretation of what he’s suggesting is this: Instead of one, there could be many digital dollars. All private.

By 2023, the US will put in place Fed­Now, its first new payment system in 40 years. It will allow two…

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