Finance is of the those fields where it 'pays' to take notes and act accordingly, whether its the Central Bank governor givings its quarterly minutes or the CEO of a major financial institution sharing their thoughts on developments affecting the economy or shaping financial world, it 'pays' to take notes. While its important "NOT" to get carried away by mainstream financial news outlets as there are rampant conflict of interest, it 'pays' to take notes of the financial narrative circulating. Recently the Senior Vice President and director of research gave an interesting view of Bitcoin during an interview:
St. Louis Federal Reserve Senior Vice President and director of research, David Andolfatto talked about how Bitcoin is not a very good monetary instrument because of its fixed money supply model.
To be a good monetary instrument, he said, the asset or currency needs to be stable but Bitcoin is very "volatile."
There needs to be kind of an "elastic currency something that grows and contracts with the demand," he said.
Although Bitcoin might not compete with the dollar, Andolfatto said Bitcoin competes with gold as a hedge, "even more so because Bitcoin is much more fungible" and he could see it as a "go-to" asset.
The latter part of the above statement caught my attention, "Bitcoin competes with gold as a hedge, even more so because Bitcoin is much more fungible and he could see it as a go-to asset". This certainly deserves some reflection as the implication can be huge for the overall market, Gold currently is a multi-trillion dollar industry, its part of the balance sheet of every Central Bank and arguably the most well known and respected financial instrument.
Probably the guys at the Federal Reserve are warming up to the idea of Bitcoin as an asset class in its own rights and even more so, could he actually be revealing a 'consensus' among his colleagues? Share your thoughts below
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