Federal Reserve Chairman St. Louis, James Bullard, told CNBC on Tuesday that he believes that rising interest in bitcoin is not a serious threat to the US dollar as the world’s reserve currency.
“I just think that for Fed policy, there will be a dollar savings, as far as can be seen – a global dollar savings, as far as can be seen – and whether the price of gold goes up or down, or the price of bitcoin goes up or down. down, it doesn’t really affect that, “Bullard told Squawk Box.
Bitcoin, in particular, has been supported by crypto-bulls as a valuable deposit that can be used to hedge against inflation or the degradation of fiat currencies, such as the dollar. Some have made it known as “digital gold”. In addition, bitcoin and other cryptocurrencies also present themselves as a way to buy goods and services, such as real money.
Bullard, who led Fed St. Louis since 2008, has expressed concern about large-scale transactions using a number of cryptocurrencies that are not issued by governments. “Dollars can already be traded electronically, so I’m not sure that’s really the issue here. The issue is privately issued currency,” he said.
Before the Civil War, it was common for banks to issue their own notes, Bullard said. He likened it to Bank of America, JPMorgan and Wells Fargo, all with distinct dollar brands. “Everyone traded and traded with different discounts, and people didn’t like it at all,” he said.
“I think the same thing would happen with bitcoin here,” Bullard said. “You don’t want to go to a non-uniform currency where you go to 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 uniform currency that came during the civil war. “
Bullard’s comments came shortly after the bitcoin price eclipsed $ 50,000 per coin for the first time. The latest major step for bitcoin follows moves into the cryptographic space by established financial firms such as BNY Mellon and Mastercard.
Tesla also announced last week that it had bought $ 1.5 billion worth of bitcoin using cash on its balance sheet and planned to accept digital currency as payment for its products. The action of the electric vehicle manufacturer was seen by some as another major step towards the widespread acceptance of bitcoin, which is the largest digital currency in the world by market value.
While Uber does not intend to buy bitcoin as an investment, CEO Dara Khosrowshahi said it is possible that the food transport and delivery company will allow customers to pay with digital currencies. “Just as we accept all kinds of local currency, we will analyze cryptocurrency and / or bitcoin in terms of the currency to be traded,” Khosrowshahi told CNBC on Thursday. “We will definitely look and if there is an advantage there, if there is a need there, we will do it. We will not do it only as part of a promotion.”
When analyzing whether cryptocurrencies pose a threat to the dollar, Bullard stressed that there is nothing new about competition. It’s something that has lasted for centuries, he said. “It’s a currency competition, and investors want a safe haven. They want a stable stock of value and then they want to invest in that currency,” said Fed Chairman St. Louis.
For example, he argued that both the euro and the yen are strong currencies. However, “none of them will replace the dollar,” he said. “It would be very difficult to get a private currency that looks more like gold to play that role, so I don’t think we will see any changes in the future.”