The President of the Federal Reserve Bank of St. Louis James Bullard has shared his view on the future of Bitcoin. He is confident that the cryptocurrency poses no threat to the US dollar. Pointing out the unpopularity of various versions of dollars issued by banks prior to the Civil War, Bullard predicts that the same fate will happen to Bitcoin.
The President of the St. Louis Fed says Bitcoin’s popularity will not threaten the dollar
James Bullard said in an interview with CNBC last week that the increasing interest in Bitcoin, coupled with all-time high prices, does not pose a threat to the US dollar as the world’s reserve currency. Bullard is an economist who has served as President of the Federal Reserve Bank of St. Louis since 2008.
“I just think that for Fed policy it will be a dollar economy as far as the eye can see – a dollar world economy as far as the eye can see – and whether the gold price goes up or down or the bitcoin price goes up or down , has no real impact on it, “said the President of the St. Louis Fed.
Bullard raised concerns about widespread financial transactions involving various cryptocurrencies that are not issued by governments. “Dollars can already be traded electronically, so I’m not sure this is really the problem. The problem is privately issued currency, ”he said.
He then referred to the pre-Civil War era, describing how it was customary at that time for banks to issue their own currencies. Comparing the situation to financial institutions like Bank of America, JPMorgan and Wells Fargo, all of which had different brands of dollars, he explained the following:
They were all trading around and they were trading with different discounts and people didn’t like it at all. I think the same would happen to Bitcoin here.
“You don’t want to go into an uneven currency that you go in Starbucks and maybe you will pay with Ethereum, maybe you will pay with ripple, maybe you will pay with Bitcoin, maybe you will pay with a dollar. That’s not how we do it. We have a single currency that was introduced at the time of the civil war, ”he confirmed.
Regarding whether Bitcoin or other cryptocurrencies pose a threat to the U.S. dollar, Bullard emphasized that the competition is nothing new and has been around for centuries. “It’s currency competition and investors want a safe haven. They want a stable store of value and then make their investments in this currency, ”he described.
The president of the Federal Reserve Bank of St. Louis cited examples of the euro and the Japanese yen as competing currencies. “Neither of them will replace the dollar,” he concluded:
It would be very difficult to get a private currency that is really more like gold to play that role, so I don’t think we’ll see any changes in the future.
Meanwhile, some analysts are not as optimistic about the US dollar as Bullard is. Ruchir Sharma, chief global strategist of Morgan Stanley Investment Management, said last week, “Bitcoin is also making headway in its ambitions to replace the dollar as a medium of exchange.” Last July, Goldman Sachs warned that the US dollar was in danger of losing its status as a world reserve currency. In Russia, gold has already exceeded the US dollar in the country’s reserves as Russian President Vladimir Putin focuses on de-dollarization.
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