NY Fed Economists: ‘Advanced Economies’ May Not Need Crypto

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New York Fed’s Research and Statistics Group economists, Michael Lee and Antoine Martin, expressed their opinions about cryptocurrencies in a recent interview published at the Federal Reserve Bank of New York.

For Lee, cryptocurrencies not being “backed by anything” real is not so much an issue, because although it is not supported by a physical commodity, “neither is the dollar and most other modern currencies.” For him, it’s the trust in the currency that ultimately makes it legitimate in value in a payment environment, thus making it an “acceptable medium of exchange.” And although trust in cryptocurrency is not from any government or institution, it certainly is fulfilled by the Blockchain technology itself.

As to whether or not crypto is going to be the money of the future, meanwhile, Martin said he doubts it, at least not in “advanced economies.” This is due to the factors of “lack of convenience” and “extreme volatility, pointing out that “people do tend to trust financial institutions to handle payment and central banks to maintain the value of money.”

 

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