Head of St Louis Fed Says Bitcoin Not a Challenge to US Dollar’s Global Dominance

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The head of the St. Louis Federal Reserve believes that Bitcoin poses no threat to the status of the US dollar as a global reserve currency.

In an interview with CNBC on Tuesday, James Bullard said the Fed’s policy focus would remain “as far as the eye can see” on a global dollar economy.

“Whether the price of gold goes up or down or the price of bitcoin goes up or down has no real bearing on it,” said Bullard.

Instead, the President of the Fed identified “privately issued” cryptocurrencies that were not approved by the government as the main problem. Bullard then drew comparisons to a time in pre-Civil War US history when banks issued their own banknotes.

“They were all trading around and they were trading at different discounts and people didn’t like it at all,” Bullard said. “I think the same thing would happen to Bitcoin here.”

Specifically, Bullard’s concerns centered on a scenario where currencies could become “inconsistent” envisioning a situation where users would walk into a Starbucks paying with either Bitcoin, ether, or US dollars.

“That’s not how we do it. We have a single currency that was introduced at the time of the Civil War, ”said Bullard.

The St. Louis Fed chairman also noted that in a “currency competition” like they had for centuries, investors are looking for a safe haven and comparing Bitcoin to gold.

“It would be very difficult to get a private currency that is really more like gold to play that role. I don’t think we’ll see any changes in the future,” said Bullard.

Bullard’s comments came as Bitcoin hit a new all-time high of over $ 50,000, driven by strong institutional demand from automakers like Tesla, business intelligence firm MicroStrategy, and investment bank BNY Mellon.