After dismissing bitcoin’s chances of challenging the US dollar as a medium of exchange, the Federal Reserve Chairman, Jerome Powell, said that the cryptocurrency could be a substitute for gold.
He also doubled-down on Fed’s previous stance on potentially launching its own central bank digital currency (CBDC) by saying that there’s no need to rush it or be first on the market.
Bitcoin Substitutes Gold, Not USD
During an online conference held by the Bank of International Settlements (BIS), Powell reiterated his previous stance that bitcoin fails to serve as a store of value and medium of exchange due to its enhanced volatility.
As such, he believes that all cryptocurrency assets remain a speculative form of investment that won’t replace the dollar but has the chance to do so with gold.
“They are highly volatile and therefore not really useful stores of value, and they are not backed by anything. It’s more a speculative asset that’s essentially a substitute for gold rather than for the dollar.”
Previously, the sixteenth and current chairman of the Fed said in 2019 that bitcoin hasn’t reached mass adoption but noted that some investors tend to use it as a store of value – as an alternative to gold.
No Rush on CBDCs
The realm of launching a CBDC is a hot topic among central banks around the globe. China is arguably the most advanced nation on this matter as the People’s Bank of China has carried out several trials in which it provided citizens with millions of dollars to test the payment mechanism.
On the other hand, the US Federal Reserve has been somewhat negligent. Powell used the moment to assert that there’s no rush for the central bank and promised transparency during the development stages:
“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. So you can expect us to move with great care and transparency with regard to developing a central bank digital currency.”
He added that the US doesn’t have to win the race in terms of fast launch. Instead, the world’s largest country by nominal GDP has to make it right.
Featured Image Courtesy of BusinessInsider