Current San Francisco Federal Reserve president John Williams suggested in a speech on Friday that cryptocurrency is unlikely to replace the current fiat currency system, according to reporting from CNBC. Williams, who has led the San Francisco Fed since 2011, was recently chosen to take over as president of the New York Federal Reserve when William Dudley retires on June 17.
In his speech, Williams acknowledged that his role as a central banker has left him with a biased perspective, but he believes that responsibility for currency management should remain in the hands of central banks and national governments. He suggested that those institutions are best suited for solving “big problems.”
Williams praised cryptocurrency’s potential as a technology promise. However, he argued that “cryptocurrency doesn’t pass the basic test of what a currency should be,” noting that currencies should serve as a real store of value and be “elastic” enough to respond to different financial needs and economic conditions.
He also cited oft-repeated complaints about digital currency’s potential illicit uses:
"The setup or institutional arrangement around bitcoin and other cryptocurrencies, first of all they have problems with fraud, problems with money laundering, terror financing. There's a lot of problems there."