Alan Greenspan, former Chairman of the U.S. Federal Reserve, expressed his views on Bitcoin and central bank digital currencies (CBDCs).
“The value of Bitcoin can never be negative,” Greenspan asserted, signalling his cautious support for the cryptocurrency as it trades at $67,745.70, up by 0.59% in the past 24 hours. The global crypto market cap now stands at $1.34 trillion, though trading volume dipped by 12.13%.
Greenspan Support for Crypto over the Years
Greenspan, who led the Federal Reserve for nearly two decades, also discussed the role of national currencies and the importance of sovereign credit.
According to Greenspan, central banks do not need to issue digital currencies, as national currencies are uniquely backed by sovereign credit, and a level of security for private companies or cryptocurrencies cannot match.
“The sovereign credit of the United States is beyond Facebook’s imagination,” he stated, referencing Facebook’s abandoned Libra cryptocurrency project.
In a year-end Q&A published by Advisors Capital Management, where he has served as an economic advisor since 2016, Greenspan shared additional insights on the broader cryptocurrency market, particularly in light of the FTX collapse, which shook investor confidence last year.
He emphasized the stability and trust in the U.S. dollar compared to the volatile nature of digital assets. Greenspan’s concerns reflect ongoing scepticism among central banking leaders regarding the risks of unregulated digital currencies and exchanges.
The Debate on the Future of Digital Finance
Greenspan’s remarks are in line with a larger discussion over the direction of digital banking. Even if Bitcoin and other cryptocurrencies have gained popularity and acceptance, central bankers, both past and present, are still wary of their long-term sustainability.
Traditional financial experts like Greenspan emphasise the security and stability of state-backed currencies over the volatile realm of cryptocurrencies, despite Bitcoin’s allure as a decentralised asset.
Reputable in the world of economics, Greenspan chaired the Fed from 1987 to 2006 after being chosen by four US presidents. His most recent remarks highlight the continuous conflict between established financial institutions and the new environment of digital assets.