The current president and chief executive officer of the San Francisco Federal Reserve Bank, and the man expected to soon be the New York Federal Reserve Bank, John Williams, has rejected the suggestion that cryptocurrencies comprise currency.
New York Federal Reserve Nominee Rejects Cryptocurrencies as ‘Currencies’
Mr. Williams, the man nominated to head the New York Federal Reserve, has stated that “Cryptocurrency doesn’t pass the basic test of what a currency should be.”
Mr. Williams asserted that currencies should comprise “basically something with a store of value,” also emphasizing the need for currencies to be “elastic” in order to adapt to a wide range of economic conditions and circumstance. Despite the criticisms, Mr. Williams failed to further elaborate on how cryptocurrencies fail to or could better fulfill the aforementioned monetary functions.
The current San Francisco Federal Reserve president also stated that “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.” At least, Mr. Williams acknowledged that his extensive experience in central banking had left him “very biased” regarding issues pertaining to cryptocurrency.
Mr. Williams also criticized “The setup [and] institutional arrangement[s] around bitcoin and other cryptocurrencies,” claiming that the cryptocurrency sphere suffers from “problems with fraud, problems with money laundering, terror financing. There’s a lot of problems there,” Mr. Williams stated.
Mr. Williams is expected to be appointed as the head of the New York Federal Reserve Bank in June when the current president, William Dudley, will step away from the position.
U.S. Federal Reserve Officials Criticize Cryptocurrency
Mr. Williams’ comments come following weeks of increasingly hostile rhetoric issued representatives of various federal reserve banks in the United States.
At the start of April, Federal Reserve Board of Governor member, Lael Brainard, indicated that the institution is “monitoring is the extreme volatility evidenced by some cryptocurrencies.”
For instance, Bitcoin rose over 1,000 percent in 2017 and has fallen sharply in recent months,” Mrs. Brainard said. “These markets may raise important investor and consumer protection issues, and some appear especially vulnerable to money-laundering concerns.”
At the end of March, the president and chief executive officer of the Federal Reserve Bank of Atlanta, Raphael Bostic, rejected the proposition that cryptocurrencies comprise money. Mr. Bostic discouraged consumers from investing in the virtual currency markets, stating “Don’t do it. They are speculative markets. They are not currency. If you have money you really need, do not put it in these markets.’’
In January, the president of the Federal Reserve bank of Chicago, Charles Evans, stated that bitcoin is “Not money-like at the moment,” adding that cryptocurrency investors are “swimming with all the sharks in the world because of all the anonymity.’’
Do you think that cryptocurrencies fulfill the basic functions associated with ‘money’ or ‘currency’? Share your thoughts in the comments section below!
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