President Of Federal Reserve Bank James Bullard Says Crypto Is “Worthless” But May Have a Purpose

The president of the Federal Reserve Bank of St. Louis talked about the value of cryptocurrencies, stating that most of them are “worthless” but may continue to circulate alongside nation-backed currencies.

As part of a Yahoo finance Live panel, James Bullard, President of the Federal Reserve Bank of St. Louis, talked about a number of issues including monetary policy and his stance on cryptocurrency.

Bullard mentioned that currency competition is nothing new, and that the sheer volume of cryptocurrencies available have meant that many of them are “worthless”.

“If you allow private currency issuance, you’ll get all kinds of private currencies being issued. And that’s exactly what has happened. We have a couple of thousand of these around. Most of them are worthless”

He admitted that non-conventional currencies, such as cryptocurrencies, may have a place in the financial order, however:

“If a cryptocurrency can facilitate transactions that are difficult to make in conventional currencies, then they will have a purpose and might circulate alongside of the nation-backed currencies”

The issue of volatility was mentioned, as what Bullard referred to as a “fundamental problem in the international monetary order”.

the fact that different currencies have volatile exchange rates, that’s a fundamental problem in the International Monetary Order. And it’s just that much bigger of a problem for privately-issued currencies. But it’s even a problem for nation state type currencies, where they trade in a volatile way against each other that seems to be distant from actual movements and fundamentals.

While Bullard noted that volatility is an issue with anyone hoping to trade or invest in cryptocurrencies, and he hopes that people are aware of the risks involved, the President of The Federal Reserve  of St.Louis admitted that he believes people are going into this financial arena with their “eyes wide open”:

“Of course, anytime any investment that you do can go up, but it can go down as well. And so, you know, anybody that’s putting a portfolio together has to balance the risk and reward, as always in finance”

Bullard ended the interview by stating that in finance, there is always risk and reward involved, with those who enter the space needing to balance the two carefully. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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