The Chairperson of the US Federal Reserve has stated that cryptocurrency, if adopted across the globe, would eliminate the requirement of a reserve currency altogether. Before the Senate Banking Committee, on the 11th of July, Jerome Powell analyzed the cryptocurrency system and said that its global prevalence surely would decline the requirement to maintain reserves which are kept as the anchor currency.
The US Dollar is currently the world’s dominating currency in reserves and Powell acknowledges that the preeminent cryptocurrency may demand to redraw the economic landscape. This may have not happened yet, but the signs of the times are telling. The Chairman also stated that he thinks that reserve currencies may soon become obsolete, but widespread adoption of cryptocurrencies such as Bitcoin are not too much to go from. Its value remains to be in the balance much like the value of gold.
His comparison of the currency must be noted as he is the custodian for the gold which is being held by the US and foreign governments, and other central banks and international organizations. According to Powell, this estimation has been happening since the inception of cryptocurrencies – from the moment that crypto currency was adopted into the financial system.
He claims the US may have several currencies at hand in the near future.
Mr. Powell has testified before the House Financial Services Committee earlier in the week while acknowledging that Facebook’s contribution of the stablecoin Libra could be impactful on a systematic scale for the financial and regulatory landscape in the world.
Chinese central banking veterans have already characterizes the anticipation for Facebook’s venture as part of the dollarization fashion across the globe, and are unhappy that Beijing must resort to cautious and detailed policy in place to maintain strength of their currency and its value.
The world may not be taking to cryptocurrency all of a sudden, but a slow and sure change seems to be in store, along with stabilization of the value of cryptocurrency if the current monetary climate is to continue.