St. Louis Federal Reserve president James Bullard is dismissing the notion that Bitcoin could be a threat to the US dollar’s global supremacy.
In a new CNBC interview, Bullard says that, as far as the Federal Reserve is concerned, the US dollar will remain dominant for the foreseeable future.
“I just think for Fed policy, 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. And whether the gold price goes up or down or the Bitcoin price goes up or down doesn’t really affect that.”
The St. Louis Federal Reserve president argues that with “strong” fiat currencies such as EU’s euro and the Japanese yen failing to usurp the dollar’s role as a global reserve currency, it would be very surprising to see a stateless cryptocurrency complete the task.
“Currency competition’s been going on forever. The British pound in the 19th century was the top dog. It was replaced by the dollar in the 20th century – still the top currency, but it is a currency competition and investors want a safe haven. They want a stable store of value. And then they want to conduct their investments in that currency.
The yen also very strong, the euro also very strong. But neither of those is going to replace the dollar. It would be very hard to get a private currency that’s really more like gold to play that role. So I don’t think that that’s where we’re going to see any changes in the future.”
Bullard adds that he sees Bitcoin as more of a “rival” to the yellow metal than anything else.
“I can characterize it as a rival to gold and that might be a good way to think about it.”
Although Bullard is not optimistic about Bitcoin’s chances to replace the dollar, last week, the St. Louis Federal Reserve issued a report in which the organization said it believes that decentralized finance (DeFi) and cryptocurrencies could significantly alter the global financial landscape.
“DeFi may lead to a paradigm shift in the financial industry and potentially contribute toward a more robust, open, and transparent financial infrastructure.”
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