Bitcoin poses no threat to the dollar as the world’s reserve currency claimed, the Fed has claimed
The president of the Federal Reserve Bank of St. Louis, James Bullard, has stated that people prefer using a uniform medium of exchange like the United States Dollar over a non-uniform currency like Bitcoin. Expressing his failure to understand the hype around cryptocurrencies, Bullard stated that the issue was not with conducting transactions using a currency that can only be traded electronically, but with using privately issued coins.
Bullard who was named the 7th most influential economist in the world in terms of media influence in 2014, explained in an interview with CNBC’s Squawk Box yesterday how the pre-Civil War United States went through a period of confusion and dislike for trading the “equivalent of Bank of America dollars and JPMorgan dollars and Wells Fargo dollars.”
“I think the same thing would occur with Bitcoin here,” said Bullard. “You don’t want to go to a non-uniform currency where you’re walking into Starbucks and maybe you’ll pay with Ethereum, maybe you’ll pay with Ripple, maybe you’ll pay with Bitcoin, maybe you’ll pay with a dollar — that isn’t how we do this,” he added.
The Fed president further explained that other privately issued currencies are required to abide by the same restrictions as any currency issued by a central authority. He also expressed concern over the growing adoption of Bitcoin by stating that private currencies are usually unable to maintain a stable value against goods and other currencies, adding that their future supply is not “at all clear.”
Stating that he doesn’t view Bitcoin as a threat to the dollar, Bullard said that “It’s going to be a dollar economy as far as the eye can see and a dollar global economy really as far as the eye can see. Whether the gold price goes up or down or the Bitcoin price goes up or down doesn’t really affect that.”
Bitcoin is often pitched as a hedge against inflation and called “digital gold”. Despite not seeing a future for the potential of cryptocurrencies, Bullard believes that such a comparison “might be a good way to think about” Bitcoin.
Bullard’s comments come amid Bitcoin hitting a new all-time high price of more than $50,000 yesterday.