According to the New York head of the Federal Reserve Bank of New York, John Williams, Bitcoin and other cryptocurrencies cannot replace the US dollar because they fail the basic test of what a currency should be.
Reported by CNBC this April 20th, Williams’ statement was the following:
“Cryptocurrency doesn’t pass the basic test of what a currency should be. [Currency is] basically something with a store of value [and bitcoin is not that].”
John Williams is currently the president of the Federal Reserve Bank of San Francisco – and the presumptive next president of the Federal Reserve Bank of New York. He is also a big crypto-skeptic who slams virtual currencies on many occasions, saying that they will never replace paper money because they are riddled with many problems.
Williams also addressed crypto fraud as a possible problem, saying:
“The setup or institutional arrangement around bitcoin and other cryptocurrencies [is problematic]. First of all, they have problems with fraud, problems with money-laundering and terror financing. There’s a lot of problems there.”
The volatility, is according to him, what makes cryptocurrencies an unstable store of value and what hampers their ability to be used as reliable payments for various goods and services. What’s interesting is that Williams’ bearish stance differs from the sentiments of his boss and the Federal Reserve Chairman Jerome Powell, who is not a crypto-bear.
“I have nothing against Bitcoin. We generally look at some of the risks of cryptocurrencies associated with money-laundering and those sorts of issues, but we’re not broadly opposed or supportive of alternative currencies.”, Powell stated in November 2017.
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