The president of the Federal Reserve Bank of St. Louis, James Bullard, says most cryptocurrencies are “worthless”. He added that if “cryptocurrency can facilitate transactions in traditional currencies, they will have a purpose and can be transmitted with nation-backed currencies.”
Bullard of the Fed says most cryptocurrencies are worthless
Federal Reserve Bank of St. Louis President Jim Bullard talked about inflation risks and what lies ahead for Fed policy in an interview with Yahoo Finance on Monday.
He also talked about cryptocurrency given the high volatility in crypto prices seen in previous weeks. They were asked, “What are your views on cryptocurrency, its use cases right now, and … how much volatility are you seeing in crypto markets?”
Bullard replied: “I have a slide deck on it called ‘non-uniform currency and exchange rate chaos’ and some things that are there. One is that currency competition is nothing new. Private currency issue. Doing has historically been addressed in monetary theory. “
He continued, “Milton Freedman said that if you allow private currency to be issued, you will be issued all kinds of private currencies. And that’s exactly what happened,” adding:
We have around a few thousand of these, most of them useless.
“I think if cryptocurrencies could facilitate transactions in traditional currencies, they would have a purpose and could be transmitted with nation-backed currencies,” he said.
Bullard went on to discuss the volatility in the crypto market. He added that cryptocurrency is “quite volatile as well, as it has been very evident here in recent times.” However, he emphasized: “But the fact that different currencies have volatile exchange rates is a fundamental problem in the international monetary system and it is so much of a problem for privately issued currencies.”
He added that “this is also a problem for nation-state type currencies, where they trade against each other in a volatile manner that seems far from real movements and fundamentals,” in detail:
There are a lot of interesting things going on in this area and of course the Fed is also looking at the Fed coin. So we have a lot going on, watching it very carefully. And I think … in short where am I at this.
Following his comment that most cryptocurrencies are worthless, Bullard was asked whether this presents a financial stability risk.
He responded: “We hope that the people involved know the risks. Of course, every investment you make can go up but it can also go down. And so whoever is putting the portfolio together He has to balance risk and reward in finance as usual. The president of the Federal Reserve Bank of St. Louis concluded: “I think, for the most part, people like to go into it with open eyes, they definitely Are not blind to the idea that this is an unstable region. “
Bullard recently said that he believed bitcoin to be Not threatening To the US dollar. Last week, he said that cryptocurrency sales were off recently Not systematic concern For the Fed and did not affect the policies of the central bank.
What do you think of Bullard’s comments on cryptocurrency? Let us know in the comments section below.
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