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4/3/2017, 10:11 PM (Source: TeleTrader)
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Harker: Private digital currencies bring instability

Research conducted by the Federal Reserve Bank of Philadelphia led analysts to the conclusion that privately issued currencies "can lead to unstable money supply and depreciation of the currency," said Patrick Harker, president of the subsidiary of the United States central bank. Speaking about financial technology on Monday at the University of Pennsylvania, he stated fiat money like the dollar, "in a secure and stable economy," is functional because of underlying trust.

Technical, cybersecurity and privacy issues, alongside risks of laundering and other criminal activity, are the hurdles preventing the US from initiating a national digital currency project, in Harker's view. He added such innovations can't drive out the existing systems, backed by states, any time soon.

"The labor market has shown steady improvement, and the 4.7 percent unemployment rate is at, or near, what I consider to be the natural rate of unemployment... Wage growth has ticked up, which is something I’ve been looking for," he said and expressed optimism inflation may reach the target annual rate of 2% by the beginning of the next year. Harker reiterated economic growth should top 2% in 2017 and that it is appropriate for policymakers to raise interest rates two more times by a quarter of a percentage point. "I don’t want to get behind the curve, but I don’t think we need to rush, either. I consider every meeting to be live and that gives us plenty of opportunity over the course of the rest of the year," he underscored.

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