Gateway to chaos
St. Louis Fed head warns on bitcoin
Wall Street’s love affair with bitcoin and other digital currencies could bring chaos to parts of the US economy, a top Federal Reserve official warned — with certain banks and companies issuing their private currency.
James Bullard, the head of the Federal Reserve Bank of St. Louis, said on Monday the country has not faced this sort of dilemma since the 1830s.
“People have not liked that kind of thing, they want a uniform kind of thing. A dollar is a dollar,” Bullard said at a Manhattan conference for bitcoin and blockchain enthusiasts.
That problem of private currencies was eventually resolved after the Civil War, when the federal government consolidated all the money under the US dollar, the banker said.
Bullard’s comments were focused on the effects of initial coin offerings, when a company makes its own cryptocurrency — to be used for a particular purpose by a small group of people.
Bullard raised the issue that it could become a “serious” problem for consumers if there’s a Wild West of digital money, and consumers have to hold different kinds in order to make routine purchases.
“Should I pay with one cryptocurrency or another cryptocurrency or another cryptocurrency or the dollar?” Bullard asked.
“We want people to make judgments about how much is that really worth and how much am I willing to pay for it. “
Later in the talk, Bullard said that the central bank is studying the use of digital money but isn’t likely to issue its own.
People have not liked that kind of thing, they want a uniform kind of thing. — Bullard at bitcoin confab on Monday