Leader of world’s most powerful central bank says Crypto unreliable for wealth preservation

Chairman of the Federal Reserve Jerome Powell appears before the Senate Banking Committee on Capitol Hill in Washington, Tuesday, Dec. 1, 2020, during a hearing on, 'The Quarterly CARES Act Report to Congress.’ (AP Photo/Susan Walsh)
Jerome Powell says cryptos are highly volatile and therefore not really useful stores of value.

Jerome Powell, leader of the world’s most powerful central bank, recently disclosed that crypto is unreliable for wealth preservation, and the apex bank was in no hurry to introduce a competitor.

“They’re highly volatile and therefore not really useful stores of value and they’re not backed by anything,” The Fed Chief said during a virtual panel discussion on crypto banking hosted by the Bank for International Settlements. “It’s more a speculative asset that’s essentially a substitute for gold rather than for the dollar.”

Recall about a month ago, Janet Yellen the U.S Treasury Secretary and custodian of the world’s biggest economy, raised concerns that the world’s most popular crypto asset could be ideal for money laundering and illicit transactions.

“I don’t think that bitcoin … is widely used as a transaction mechanism,” Yellen told Andrew Ross Sorkin at a DealBook conference. “To the extent, it is used I fear it’s often for illicit finance. It’s an extremely inefficient way of conducting transactions, and the amount of energy that’s consumed in processing those transactions is staggering.”

In addition, Yellen raised concerns about its usual high price swings that often come to cost some investors their fortune.

“It is a highly speculative asset and you know I think people should be aware it can be extremely volatile and I do worry about potential losses that investors can suffer,” Yellen said.

In a report credited to CNBC, the highly revered monetary policymaker, Powell, spoke on why the U.S Federal Reserve Bank was in no rush to start its central bank digital currency.

“To move forward on this, we would need buy-in from Congress, from the administration, from broad elements of the public, and we haven’t really begun the job of that public engagement,” Powell said. “So you can expect us to move with great care and transparency with regard to developing a central bank digital currency.”

The U.S Fed Chief also gave credence to the fact that the U.S Congress likely would have to pass some type of authorization before the Fed could proceed with its own currency.

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