Referencing the unpopularity of various versions of dollars issued before the Civil War by banks, Bullard predicts the same fate will happen to bitcoin.
St. Louis Fed's President Says Bitcoin's Popularity Won't Threaten the Dollar
James Bullard said in an interview with CNBC last week that increasing interest in bitcoin, coupled with all-time high prices, does not pose a threat to the U.S. dollar as the world's reserve currency. Bullard is an economist who has been the president of the Federal Reserve Bank of St. Louis since 2008.
"I just think for Fed policy, it's going to be a dollar economy as far as the eye can see — a dollar global economy really 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," the St. Louis Fed president explained.
Bullard expressed concerns about widespread financial transactions using different cryptocurrencies that are 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 asserted.
He then referenced the time before the Civil War, describing that at the time it was common for banks to issue their own currencies. He likened the situation to financial institutions — such as Bank of America, JPMorgan, and Wells Fargo — all having distinct brands of dollars, elaborating:
"They were all trading around and they traded at different discounts to each other, and people did not like it at all. I think the same thing would occur with bitcoin here."