Cryptocurrency doesn’t pass the basic test of what a currency should be, but don’t take my word for it. I’m very biased against it.
That was the message from central banker John Williams, who’s in line to be the next person to chair the New York Federal Reserve Bank. Williams currently heads the San Francisco Federal Reserve and he’s considered to be the top nominee for New York Fed post once William Dudley vacates the position in June.
Williams’ message about cryptos came during a speech he made Friday.
Here, we’ll discuss them.
If it’s not fiat, then it’s not currency?
As is the case with many from the central banking community, Williams frowns upon anything that’s not fiat money.
From Williams’ speech, one could glean that his position is rooted in the same philosophy that many from the traditional finance space have when it comes to currencies.
Williams said the following, according to CNBC:
"The idea of the supply of currency and thinking about currency really belongs more in the sphere of government and central banks. My view is it's really more of a promise of technology."
Smell test
As far as cryptos not passing the basic test of what a currency should be, Williams noted the store of value issue.
As reported by CNBC, Williams said he believed that a currency should be "basically something with a store of value, and that currencies need to be "elastic" to be able to support varying economic and financial conditions.
Then there is the typical go-to point about cryptos being the scam tools of choice to facilitate crimes.
"The setup or institutional arrangement around bitcoin and other cryptocurrencies, first of all they have problems with fraud, problems with money laundering, terror financing. There's a lot of problems there.”
That pesky volatility
The volatility of cryptos, especially Bitcoin, is enough to drive a mad man sane. The volatility is another reason Williams doesn’t look favorably upon them.
He noted that the volatility makes it difficult for one to determine the correct prices for items.
Noteworthy about the volatility is Bitcoin’s recent price moves. After being stuck below $9,000 for the past month, Bitcoin breached $9,000 for the first time Monday.
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