Former Federal Reserve Governor Backs Cryptocurrency and Blockchain
A former Federal Reserve governor, Kevin Warsh, thinks that the future of money is arguably the cryptocurrency and the blockchain technology. This is contrary to the unanimous agreement among the different central bank governors that digital currency cannot replace the conventional type of government-backed currency. However, the latest comments cannot be ignored totally as the utility value of the virtual currencies has also been stressed by one or the other officials. In any case, one thing is clear, i.e., despite opposition to the concept, there is also a view that is growing up in favor of the cryptocurrency.
Doable and Advisable
Warsh was a shortlisted candidate to head the Fed before Trump preferred to name Jerome Powell as the Fed chief. He was a governor between the years 2006 and 2011. The former Fed official thinks that an American-backed digital currency is not only doable but also advisable, sputniknews reported. He also sees that the largest financial institutions in the world are headed towards participating in the digital currency. Once that happens, the enter playing field will change altogether. Currently, some of the financial service providers like JPMorgan Chase have indicated their preference for blockchain technology though they are not keen on virtual currencies.
However, there is a call for the United States-backed cryptocurrency that could likely be known as FedCaoin. Supporters of digital coins like Warsh and others are gearing up their rhetoric in favor by pointing out the favorable points. This included using the technology to sidestep the gatekeepers apart from taking over one’s cash flow control. These evangelists’ of bitcoin and other virtual currencies were driven by a deep distrust of the commercial banks, which control the money supply in the world.
A Nytimes.com report was quoted as Warsh saying that “Most central banks have a view that these crypto-assets are clever, like guys in the garage did it and it’s kind of cool, or risky. Not that it would supplant and replace cash.” He pointed out that stability is the primary factor and sees that the Fed establishing FedCoin could mean bringing in legal activities in a cryptocurrency.
Fed could use the blockchain technology for its decentralized transactions of record keeping in financial networks that were run by the Federal Reserve. That is because the central bank is often responsible for transferring billions of dollars in one whack. Recently, Warsh remarked that a central bank-sponsored virtual currency could have a big role to play.
On the other hand, Powell thinks that blockchain technology is something that could have significant applications in the complete payments part of a country’s economy. During his confirmation hearing in late 2017, he pointed out the possible use cases of digital currencies. The remark of a former Fed governor could be interpreted as advice for preparing itself to claim the cryptocurrency technology version 2.0 so that it could have the controlling power.
Warsh said that “If the next generation of cryptocurrencies look more like money and less like gold — and have less volatility associated with them so they would be not just a speculative asset but could be a reliable unit of account — as a purely defensive matter I wouldn’t want somebody to take that monopoly from me.”