According to an economist working with the Federal Reserve Bank in St. Louis, cryptocurrencies could hold the solution for disparity problems that the dollar currently faces.

In an hour-long interview, the Federal Reserve Bank – one of the 12 regional banks making up the U.S banking system – answered all questions asked on Twitter through David Andolfatto (the bank’s research division vice president). During the session, David addressed a question from a Twitter user regarding the usability of cryptocurrencies in solving the half-century-old “Triffin Dilemma.”

The “Triffin Dilemma” refers to conflicting interests occurring between global and national monetary policy in a certain country. That happens when a national currency is being used as a global reserve. It specifically refers to the U.S dollar, given that it has been considered as the world’s reserve currency for more than a decade. To maintain this role, the U.S has to undergo a trade deficit.

Answering the “Triffin Dilemma” question, David compared the situation to a double-edged sword that affects the U.S for possessing a currency that serves as the world reserve. Andolfatto further added that if a private cryptocurrency were to replace the dollar as the world reserve currency, it would essentially eliminate the situation.

Other questions that arose during the session included whether Andolfatto believed that a cryptocurrency could replace the dollar.

On both counts, the economist noted that cryptocurrencies are private assets and would fall under the review of the central bank. He further added that since there is no need for keeping a decentralized record, it may be hard for the dollar to be replaced by a cryptocurrency. Andolfatto further said that he doesn’t see the cryptocurrency demand surpassing the existing reserve currency.

Cryptocurrency Banks USA federal reserve Regulations

Cookie Policy uses cookies to enhance your experience. By continuing without changing your settings, you agree to this use. To provide the best blockchain and crypto media on the web for free, we also request your permission for our partners and us to use cookies to personalize ads. To allow this, please click "OK". Need more info? Take a look at our Cookie Policy.

OK Cookie Policy