Fed Chairman Jerome Powell Comments on Cryptocurrencies, Calls Bitcoin (BTC) Substitute for Gold
Jerome Powell, the Chairman of the Federal Reserve recently shared his views regarding the developments in the cryptosphere while speaking at the a virtual panel discussion on digital banking hosted by the Bank for International Settlements (BIS).
The Fed Chairman asserted that cryptocurrencies are unstable store of value. Speaking about the public cryptocurrencies like Bitcoin, Powell said: “They’re highly volatile, see Bitcoin, and therefore not really useful as a store of value. They’re more of an asset for speculation. So they’re also not particularly in use as a means of payment. ... It’s essentially a substitute for gold rather than for the dollar.”
Because of their high-volatile behaviour, Powell said that he prefers to refer them as “crypto assets” instead of coins. He said that public should better understand the risks associated with Bitcoin and other cryptocurrencies.
The Fed Reserve chairman also spoke about how the U.S. central bank has been working to improvise its own payment system and facilitate faster money transfer. He further added that the unveiling of the final product shall happen in the next two years.
Powell also added that the central bank is currently studying the potential costs and benefits of using a Digital Dollar and that it would take its own time before moving into anything.
“To move forward on this, we would need buy-in from Congress, from the administration, from broad elements of the public, and we haven’t really begun the job of that public engagement,” he said. “So you can expect us to move with great care and transparency with regard to developing a central bank digital currency.”
However, if the Fed were to at all pass the Digital Dollar, the U.S. Congress will have to pass a legislation to accommodate its own currency. He added that the COVID-19 pandemic has stressed the need of having a better payment system in order to move money faster to the needy people. “It highlighted across a whole range of things the disparate impact of so many things on poor and lower- and moderate-income communities,” Powell said.
A day after Powell’s comments on Bitcoin, the BTC price has corrected more than 6% slipping below $55,000 levels. At press time, BTC is trading at a price of $54,985 with a market cap of $1.02 trillion.