Pictured is US Federal Reserve Chairman Jerome Powell. EFE / Stephanie Reynolds / Archive
Chairman of the Federal Reserve Board of the United States, Jerome Powell said that although the central bank continues to explore the potential of a digital currency for the North American economy, cryptocurrencies such as Bitcoin cannot be an effective alternative to the US dollar.. Bitcoin gained a renewed fame in the past year, as the adoption of cryptocurrencies by large companies pushed their prices up. But US government officials don’t seem to like it.
Companies like Tesla, MicroStrategy, and Square have invested in the digital code. On the other hand, various actors in the financial sector are interested in using cryptocurrencies as an alternative asset.
The cryptocurrency craze allowed Bitcoin to reach $ 61,742 earlier this month as more investors were looking to profit from the growing popularity of the token.
“ Crypto assets are very volatile and thus not really useful as a store of value. ”
Powell has doubts about cryptocurrencies and their supposed use cases. The head of the central bank said during a conference call hosted by the Bank for International Settlements, that currencies can be an alternative to gold, but that the large fluctuations in their prices make them unsuitable as an alternative to the dollar.
“Crypto assets are very volatile,” MarketWatch quoted Powell as saying, declining to talk about cryptocurrencies, and “thus they are not really useful as a store of value.”
Nothing supports them. “They are rather an asset to speculation,” he added.
Companies like Tesla, MicroStrategy, and Square invested in the digital token, which increased its price
After Powell’s words, Bitcoin fell slightly, which is not an unusual move at all within the fluctuating price of the token. The cryptocurrency was trading just under $ 60.00 on Tuesday morning. With a progression of more than 100% so far this year.
Although based on such pasts by US regulators, cryptocurrencies are unlikely to gain the support of the Federal Reserve, the central bank has considered creating its own digital currency. The Federal Reserve partnered with researchers from the Massachusetts Institute of Technology (MIT) in August to build and test a central bank digital currency. Fed Governor Lyle Brainard said at the time that officials were seeking a better understanding of digital currencies and their potential applications through testing. However, the token included in the study was just “hypothetical,” he added.
Powell reiterated that while the bank continues to study the potential of the digital dollar, serious scrutiny is necessary before implementing such a currency.
Nothing supports them. They are rather an asset to speculation. “
“In order to make progress on this, we will need the support of Congress, the administration, and the broad sectors of the public,” the Fed Chairman said. “We haven’t really started doing that public engagement.” “Since we are the main reserve currency, the world, we do not need to rush into this project. We don’t need to be the first to do the marketing.”
Halfway between the central bank’s digital currency and the cryptocurrency, there are stable currencies. These tokens counteract the volatility of cryptocurrencies by tying their value to more predictable assets, such as coins issued by governments.
Powell said that stable currencies “are an improvement” compared to cryptocurrencies and “may have a role to play” in digitizing the dollar, but it is unlikely to form the basis of the global payment system. He added that any candidate for a global currency controlled by a private company deserves “the highest level of regulatory expectations.”
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