Central banks should not issue cryptocurrencies according to Alan Greenspan, the former US Federal Reserve chairman. The news was reported by U.today. The statement was made at Caijing’s annual economic outlook conference.
“There’s no point for them to do it,” Greenspan said at Caijing’s annual economic outlook conference that took place in Beijin.
Many countries have released their own cryptocurrencies. Venezuela’s Petro was created to help circumvent the sanctions placed on them by the US and UN. Petro, interestingly, is tied to the value of petroleum. China has released its own digital currency that will be based on gold. Stable coins like Tether and Libra are pegged to fiat currencies. However, no western government has not gotten onboard as yet. While European ministers have discussed a framework to enable the creation of a “Euro” coin, the topic is still too taboo. The backlash faced by Facebook over libra can testify to that fact. Central banks should not issue cryptocurrencies, says Alan Greenspan, as the fiat currency is better than anything offered by crypto.
No need for Facebook
Greenspan explains that fiat currencies are backed by the credit of a sovereign country. He further took a jab at Facebook by saying that the fundamental sovereign credit of the US is “far in access” of anything that the social media giant can offer or imagine.
Jerome Powell, the incumbent chairman of the Federal Reserve, appears to be on the same page with Greenspan. As reported by U.Today, Powell dismissed the idea of the US central bank launching its own cryptocurrency, which coincided with a rapid Bitcoin price drop.
Facebook’s Libra cryptocurrency, which was announced back in June, has ruffled the feathers of many bankers, regulators, and politicians around the globe.
Who is Alan Greenspan?
Alan Greenspan is an American economist who served as Chair of the Federal Reserve of the United States from 1987 to 2006. He currently works as a private adviser and provides consulting for firms through his company, Greenspan Associates LLC. First appointed Federal Reserve chairman by President Ronald Reagan in August 1987, he was reappointed at successive four-year intervals until retiring on January 31, 2006, after the second-longest tenure in the position (behind William McChesney Martin).
Greenspan came to the Federal Reserve Board from a consulting career. Although he was subdued in his public appearances, favorable media coverage raised his profile to a point that several observers likened him to a “rock star”. Democratic leaders of Congress criticized him for politicizing his office because of his support for Social Security privatization and tax cuts, which they felt would increase the deficit.
The easy-money policies of the Fed during Greenspan’s tenure have been suggested by some to be a leading cause of the dotcom bubble, and the subprime mortgage crisis (occurring within a year of his leaving the Fed), which, said the Wall Street Journal, “tarnished his reputation.” Yale economist Robert Shiller argues that “once stocks fell, real estate became the primary outlet for the speculative frenzy that the stock market had unleashed”. Greenspan argues that the housing bubble was not a product of low-interest rates but rather a worldwide phenomenon caused by the precipitous decline in long term interest rates.