Cryptos are "drift toward a non-uniform currency", says St.Louis Fed chief

19 Jul, 2019 | Updated: 19 Jul, 2019
by David Robb
Opinion
Cryptos are drift toward a non-uniform currency, says St.Louis Fed chief

A top banking official has recently acknowledged that cryptocurrencies are creating "a drift towards a non-uniform currency in the U.S.". The St.Louis Federal Reserve President, James Bullard, made the comments at an annual conference for central bankers.

In the wake of Facebook's launch of the whitepaper for its new Libra stablecoin, top authorities and regulators are paying closer attention to the crypto space. President Trump recently tweeted about Bitcoin, the Treasury Secretary held a press conference about crypto, and both the Senate and the House of Representatives organized hearings about Libra at which cryptos were discussed in more depth than ever before. Meanwhile, the chair of the Federal Reserve claimed that BTC was a "store of value", which was interpreted as a major seal of approval by many in the crypto community.

At the Central Bank Research Association’s 2019 Annual Meeting, held in New York earlier today, Bullard claimed that he wants "to view cryptocurrencies of various types as new entrants into the ongoing global currency competition". He believes that 'private' and 'public' currencies could co-exist, theoretically. However, the volatility of BTC and other cryptos is a major issue: "Currencies have to be reliable and hold their value. This is probably why government backing has been important historically, combined with a stable monetary policy that promotes stability of the currency".

According to Bullard, Bitcoin's creation was a response to an important issue, but may not be a good way of resolving it. He claimed that the proliferation of currencies, and the non-uniform monetary system, is "a state of affairs that has existed historically but was disliked and eventually replaced...Cryptocurrencies may unwittingly be pushing in the wrong direction in trying to solve an important social problem, which is how best to facilitate market-based exchange".

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