Philadelphia Federal Reserve President Patrick T. Harker warned in a speech Monday that digital currencies can lead to depreciation and an unstable money supply.

He delivered the speech at the University of Pennsylvania's School of Engineering and Applied Science for a talk on financial technology.

“The underpinning of currency, like the financial system itself, is trust,” Harker said. “A
fiat currency like that in the United States, which is issued by a central bank in a secure
and stable economy, works because we trust it. A dollar is a dollar. We all agree that it is
and there’s not much that can undermine that faith.”

Citing a 2014 report from the Federal Reserve, Harker argued that digital currencies have no fundamental guarantee of value without the central bank of a credible government backing them. The growing threat of cyberattacks, he added, presents a threat to digital currencies as well.