With respect to the possibility of a Federal Reserve Coin (Fedcoin), Jeffrey Tucker of the American Institute for Economic Research (AIER), shares similar views to Jerome Powell, chairman of the U.S Federal Reserve.
When quizzed at the Senate Banking Committee hearing on 17th July, Jerome Powell said that the Federal Reserve was not exploring the possibility of creating its own digital currency. Mr. Tucker, expanding upon his thoughts in an article for the AIER , goes one step further, arguing that the Federal Reserve should leave cryptocurrencies to the private sector and instead focus on ensuring the soundness of the dollar and the banking system.
Cryptocurrencies Should Remain in the Domain of the Private Sector
According to Mr. Tucker, the government should allow the private sector to handle Cryptocurrency technology as well as its various applications.
He believes the best course of action for the government should be the prioritization of creating a sound financial system, instead of getting involved with cryptocurrencies and possibly stifling the growth of the sector – arguing that it is the private sector, not governments, that has spearheaded technological advancement in recent years.
Using the invention of Bitcoin as an example, he argued:“The advent of Bitcoin, blockchain, and crypto is an especially impressive case, a pure revolution from below. The inventor remains pseudonymous. The technology was released into the commons on an email list. It started from nothing to become the world’s first successful experiment in universal digital money that operates without intermediation.
Mr. Tucker went on to claim that private enterprises should be allowed to freely continue with improvements to the financial sector without interference from central banks – emphasising the point that governments did not create cryptocurrency technology nor have a hand in its success.
State Cryptocurrencies Would Add Nothing New, The Gold Standard is the Way to Go
In Jeffery Tucker’s view, there is no solution a state-backed cryptocurrency could provide that the plethora of digital assets already in existence have not made available.
Given that the primary allure of crypto-assets is their decentralized nature, he argues that a centralized state-backed token in contrast is likely to be no different from the existing state-backed fiat currencies – pointing to the Venezuelan Petro – which he explains, turned out simply to be a means of circumventing U.S Sanctions.
Finally, Tucker proposes that governments go back to having the value of national currencies tied to gold. To him, the gold standard is more desirable if the goal is to have a sound currency and banking system.
Furthermore, the economist cannot imagine how an “old-world idea of a currency zone” can be combined with “modern crypto monetary systems.”
Interestingly, most of the young people who have contributed to the success of cryptocurrencies by adopting them, would probably find his idea of going back to the gold standard an “old-world idea”. Bitcoin, for instance, is considered gold by many people born in the technological age.
Tucker ultimately believes the best way for governments to help nurture the growth of the crypto space is to take a laid back approach and allow the innovation to take place, and if looking to shore up the system – to focus on gold, not crypto-regulation.