As the fiscal position of the United States continues to deteriorate at the same time that foreign countries are scaling back on their purchases of U.S. Treasuries, many investors are rightly worried about where they can hide from a potential decline in the value of the dollar and are looking to invest in a reliable “store of value.”
The Chairman of the United States Federal Reserve has said that a globally adopted cryptocurrency system could conceivably remove the need for reserve currencies.
Testifying before the Senate Banking Committee on July 11, Fed Chairman Jerome Powell gave his analysis of whether a cryptocurrency system with global prevalence could diminish — or even go so far as to remove the need for — so-called anchor currencies.
When answering questions before the US Senate banking committee on Thursday, Powell was asked: “If a cryptocurrency system became prevalent throughout the globe, would that diminish or remove the need for a reserve currency?”
Powell replied: “Things like that are possible, but we really haven’t seen them, we haven’t seen widespread adoption. Bitcoin is a good example. Really almost no one uses bitcoin for payments — they use it as an alternative to gold. It’s a store of value, a speculative store of value, like gold.”
Powell admitted that this was in the realm of possibility, albeit only in the long term. He also emphasized that the U.S. should not assume that the dollar’s status as a reserve currency would last forever.
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