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Former Federal Reserve Governor Supports FedCoin Project

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Kevin Warsh, a former US Federal Reserve governor, recently told The New York Times that the Fed should consider seriously release a government-sponsored cryptocurrency – commonly known as "FedCoin".

Warsh is part of a group of investors in Basis, formerly Basecoin, a cryptocurrency designed with an algorithmic central bank that will maintain price stability.

Warsh, Governor of the Fed from 2006 to 2011, was one of the leading candidates in the presidential election of last year.

Returning to the Fed, Warsh said that he would have assigned a team to explore a "FedCoin". He does not see such a room to replace money, but he sees it as a way to drive monetary policy during the next crisis. occurs. He noted that most central banks believe that cryptocurrency assets are subject to investor fraud and losses.

A distinguished visitor to the Stanford Hoover Institution, Warsh said that blockchain technology would be useful for allowing the transfer of trillions of dollars between banks.

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The Bank of England and the Monetary Authority of Singapore are already studying such a concept.

Fed Chairman Jerome Powell said at the November confirmation hearing that the blockchain could have "important applications in the wholesale payments part of the economy".

A special role for encryption?

Cryptocurrency would play an unusual role for a currency controlled by the central bank, according to the New York Times article.

Since central banks are largely focused on maintaining the stability of the value of money, cryptocurrency would be ill suited as a medium of exchange, given the volatility.

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Central banks are also striving to allow law enforcement agencies to contain the crimes for which cryptocurrencies are used, such as money laundering, fraud and fraud. Tax evasion.

It would also be a rebound if a technology supported by those who were motivated by mistrust of central banks became a tool for these same banks.

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Central banks that consider blockchain technology do not share the most anarchist impulses of some cryptocurrency enthusiasts, notes the article. But Warsh argues that if people believe that digital currencies in any form are the future of money, central banks should consider them more than a novelty.

One can read also: The crypto-price database project & # 39; Basis & # 39; brings in $ 133 million

Why he supports the concept

Source: Shutterstock

If the next generation of cryptocurrency is closer to silver than gold and would constitute a reliable unit of account rather than a speculative asset, Warsh He said that he would not want anyone to take away such a monopoly.

If cryptocurrency enthusiasts are right in saying that technology could provide a better way to conduct routine transactions, central banks are the institutions that have the most to lose.

Basis has already raised $ 133 million in a private placement. Backers next to Warsh include Bain Capital Ventures, GV, Stanley Druckenmiller, Lightspeed, Capital Foundation, Andreessen Horowitz, VC Wing, NFX, Capital Valor, Zhenfund, INBlockchain, Ceyuan Ventures, Sky9 Capital and others.

The goal of Basis is to marry the benefits of cryptocurrency to centralized fiduciary money. Central banks mitigate volatility through monetary policy. They develop and contract the money supply. On the other hand, cryptocurrencies have a fixed offer, which favors volatility which makes it an unreliable form of payment.

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Basis brings the benefits of cryptocurrency without volatility, said CEO Nader Al-Naji. The bases would be distributed to those who participate in the system, thus decentralizing the monetary expansion. If it achieves its goal, Basis will benefit the economies of developing countries, said Al-Naji.

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