Bullard told the news organization he believes the escalating bitcoin attraction is not a problem as far as the U.S. dollar’s position as the world’s reserve currency.
“I just think for Fed policy, it’s going to be a dollar global economy as far as the eye can see — and whether the gold price goes up or down, or the bitcoin price goes up or down, doesn’t really affect that,” Bullard told CNBC.
Although bitcoin has been touted as “digital gold” with the ability to hedge against inflation, digital money also can be used to buy goods and services. Bullard, who has led the St. Louis Fed since 2008, said he has concerns about electronic currency that’s not issued by governments.
“Dollars can be traded electronically already, so I’m not sure that’s really the issue here. The issue is privately issued currency,” he said, adding that prior to the Civil War, it wasn’t unusual for banks to roll out their own notes.
Bullard said it is not unlike having individual, distinct brands of dollars — Bank of America, JPMorgan, Wells Fargo.
“I think the same thing would occur with bitcoin here,” Bullard said. “You don’t want to go to a nonuniform currency where you’re walking into Starbucks and maybe you’ll pay with ethereum, maybe you’ll pay with ripple, maybe you’ll pay with bitcoin, maybe you’ll pay with a dollar. That isn’t how we do this. We have a uniform currency that came in at the Civil War time.”
His comments preceded the bitcoin price surge that saw the digital coin trading for $50,000 per coin on Monday (Feb. 15).
Morgan Stanley’s $150 billion investment unit Counterpoint Global is considering putting money into bitcoin and cryptocurrencies. Bitcoin surged beyond $50,000 in recent trading, up more than 73 percent this year.
Digital currency beyond bitcoin is moving into the mainstream but it’s not quite the hype, according to a PYMNTS interview with Keith Johnson, general manager of Ternio. Coin-based transactions are not only slow, they are also pricey, he said.