Central banks’ stance towards cryptocurrencies has generally been ambivalent. And it is that, while for most governments cryptocurrencies are a risk to their ability to control monetary policy. Central banks have focused on transferring the capabilities of crypto assets to their own government virtual currencies. Thus, the President of the Dallas FED says that Bitcoin is a haven of value, although he makes a distinction between BTC and future government virtual currencies.
The future of government virtual currencies
Over the past few weeks, government virtual currencies have caught the attention of the media around the world. This is due to the progress made by China for the implementation of the virtual yuan in its territory. With all the reactions and fears that this has raised in different governments, who see in this movement an attempt by China to displace the US dollar as a reserve currency worldwide.
However, the trend towards the creation of government virtual currencies is not unique to China. Well, in practically all the main countries in the world, central banks are studying the possibility of launching their own government virtual currencies. An effort that includes the US Federal Reserve, the Fed carrying out extensive studies on the feasibility of launching a virtual dollar.
This effort in most cases has also been a consequence of the increase in the importance of cryptocurrencies such as Bitcoin. Which, if they succeed in their goal of presenting an alternative to traditional fiat money, would pose a threat to the power of governments around the planet. Something that does not seem to scare the President of the Dallas Fed, Robert Kaplan, for whom Bitcoin is a haven of value, but not a threat to fiat money.
Fed Chairman Dallas Believes in Bitcoin
Thus, within the framework of the Texas A&M Bitcoin Conference 2021, the President of the Dallas FED dedicated his speech to talking about Bitcoin and government virtual currencies. Establishing a clear differentiation between cryptocurrencies such as Bitcoin, and the currencies that central banks will start issuing in the coming years. Well, while BTC is clearly an asset store of value, for Kaplan, government virtual currencies do not necessarily have to be.
«I would differentiate between a cryptocurrency, such as Bitcoin, and the discussions that are being had about the digital currency (…) Right now, it is clear that it is a store of value (…) That can prevent it from spreading too much as a medium of exchange and widely adopted, but that may change».
Likewise, the President of the FED in Dallas commented that the main function of government virtual currencies will be to serve as a mechanism to facilitate payments in the domestic economy. Therefore, if Bitcoin maintains the trajectory that it has today as a refuge of value, rather than as a currency for making purchases of goods and services. There should be no head-on collision between the two technologies.