The executive criticized the fact that it is possibility to issue private currencies in the ecosystem. He added that the cryptocurrency does not represent any competition for the US dollar but rather for gold.
James Bullard, the president of the Federal Reserve Bank of St. Louis, does not agree with the existence of many cryptocurrencies. He is concerned about the fact that most of them are worthless and therefore useless. However, he highlighted that crypto assets like Bitcoin facilitate transactions that are difficult with fiat money. In this sense, he said that they have a purpose and could circulate alongside the US dollar.
Regarding blockchains, Bullard criticized the fact that it is possible to issue private money. “If you allow issuing private currencies, you will have all kinds of them. That is exactly what has happened. There are currently a couple thousand of these [cryptocurrencies], most of which are worthless,” he said.
The official expects users to invest regardless of the risks that the volatility of the Bitcoin market pose. He classified the cryptocurrency world as an interesting space and said that the Fed is also considering issuing a central bank digital currency (CBDC).
James Bullard has shared his ideas on the pioneering cryptocurrency on other occasions in the past. In February, he stated that Bitcoin is a rival to gold rather than to the US dollar. Besides, he said that the interest in Bitcoin does not pose a threat to the US fiat currency as a world reserve.
He also argued that the interest in Bitcoin is growing because people use it to hedge against inflation or the global economic downturn. He believes that the US dollar will continue to rule the global economy “as far as the eye can see.” He argued that the rise or fall in the price of either gold or Bitcoin will not affect that.
Fed Officials Have Often Used the Term Bitcoin
Officials of the US central bank and other government agencies have frequently used the word Bitcoin. All of them agree that the cryptocurrency does not represent any competition for the US dollar but rather for gold.
In April, Anders Brownworth, a payment systems architect at the Federal Reserve Bank of Boston, talked about their CBDC prototype. He said that it will show both similarities and differences with Bitcoin.
The Fed has stated that stablecoins are an “improvement” as national currencies such as the US dollar support them. In theory, this characteristic gives them greater “credibility” than other cryptocurrencies.
Lael Brainard, governor of the US Federal Reserve, recently gave her opinion about the CBCD that the nation plans to issue. She said that it will allow reducing risks to users and stabilizing the financial system.
However, the president of the agency Jerome Powell acknowledged the possible influence of the money-printing policies on the markets. He referred to the economic aid campaigns (bonuses) resulting from a larger fiat money printing by the Federal Reserve.
US Federal Reserve officials would like to see higher inflation before deciding to tighten monetary policy. At the same time, many believe that Bitcoin will continue to gain prominence against the US dollar as a store of value.
By Alexander Salazar
