Head of St Louis Fed Says Bitcoin Not a Challenge to US Dollar's Global Dominance

James Bullard also likened bitcoin to gold as a safe-haven asset.

Feb 17, 2021 at 9:13 a.m. UTC
Updated Sep 14, 2021 at 12:12 p.m. UTC

The head of the St. Louis Federal Reserve believes bitcoin does not pose a threat to the U.S. dollar's status as the global reserve currency.

In an interview with CNBC on Tuesday, James Bullard said the Fed's policy focus will remain fixed on a global dollar economy "as far as the eye could see."

"Whether the gold price goes up or down or the bitcoin price goes up or down doesn’t really affect that," said Bullard.

Instead, the Fed president flagged "privately issued" cryptocurrencies not sanctioned by the government as being the primary issue. Bullard then drew comparisons to a time in U.S. history before the Civil War when banks issued their own notes.

"They were all trading around and they traded at different discounts to each other and people did not like it at all," said Bullard. “I think the same thing would occur with bitcoin here."

Specifically, Bullard's concerns centered around a scenario where currencies could become "non-uniform" envisioning a situation where users would walk into a Starbucks paying in either bitcoin, ether or the U.S. dollar.

"That isn’t how we do this. We have a uniform currency that came in at the Civil War time,” said Bullard.

The St Louis Fed chief also noted investors are looking for a safe-haven asset amid a "currency competition" as they had done for centuries, likening bitcoin to gold.

“It’d be very hard to get a private currency that’s really more like gold to play that role so I don’t think we’re going to see any changes in the future,” said Bullard.

The comments from Bullard came as bitcoin was reaching a new all-time high above $50,000, buoyed by strong institutional demand from the likes of car maker Tesla, business intelligence firm MicroStrategy and corporate investment bank BNY Mellon.

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