St. Louis Fed Chief Pessimistic on Crypto as Non-Uniform Currency

St. Louis Fed Chief James Bullard reportedly views cryptocurrencies as part of a global currency competition that is ultimately unhealthy. Bullard presented his views at the Central Bank Research Association 2019 annual meeting in a talk entitled “Public and Private Currency Competition.” 

Presentation slides have subsequently appeared on the official Twitter account for The St. Louis Fed on July 19.

In Bullard’s slides, he noted that there is historical precedent for certain key features of cryptocurrency. One of his bullet points reads: “Global currency competition is nothing new, nor is electronic delivery of value.” 

He also presented that “public and private currencies can compete and coexist as part of an equilibrium.” However, what Bullard appears to be concerned about is the apparent, current trajectory toward localized non-uniformity. He notes that there is some evidence to suggest that this is unfavorable, citing data on global volatility in exchange rates.

Source: stlouisfed

Bullard also noted that there is historical precedent within the U.S. indicating that localized non-uniform currency will not fly. Bullard wrote:

“Cryptocurrencies are creating drift toward a non-uniform currency in the U.S., a state of affairs that has existed historically but was disliked and eventually replaced.”

Bullard cited the book “The Jacksonian Economy” by Peter Temin to say that 90% of American money in the 1830s was issued via private banknotes. 

According to Bullard, contemporaries received this system unfavorably. A lack of uniformity reportedly entailed varying pay rates and town-specific discount books. Due to its unpopularity, uniform pay rates will reportedly implemented during the Civil War.

As previously reported by Cointelegraph, Congresswoman Alexandria Ocasio-Cortez (AOC) pressed Calibra wallet CEO David Marcus on whether currencies ought to be sovereign, corporations governing Libra, and Marcus’ comment on potentially taking his paycheck fully in Libra.

Although AOC ran out of time before finishing her line of questioning, she asked Marcus:

“In the history of this country, there is a term for being paid in a corporate-controlled currency … It’s called ‘scrip.’ The idea that your pay could be controlled by a corporation instead of a sovereign government. Do you think that there is any risk here?”

She also made a remark on scrip destabilizing in the U.S. in the past. Company scrip has been illegalized as a payment method under the Fair Labor Standards Act of 1938.