The President of the Federal Reserve Bank of Boston expects a winning streak for the digital currency Bitcoin to come to an end at some point.
“Personally, I was surprised that Bitcoin continues to flourish,” said Eric Rosengren, head of the regional central bank, in an interview with the New York Times on Friday.
The digital currency trades at more than $ 50,000 per coin and rose to a market value of more than $ 1 trillion on Friday. That surge was supported as large companies like Tesla and financial firms like the Bank of New York Mellon began to use Bitcoin.
But Mr Rosengren said he couldn’t see a long-lasting use case for Bitcoin in a world where central banks would likely offer their own alternatives at some point.
“I would suspect later that a number of central banks will have digital currencies,” he said. “If there is any digital currency other than the underground economy, it’s not clear why people would use Bitcoin.”
“I would expect Bitcoin prices to come under pressure over time,” he continued.
Mr. Rosengren noted that China and Sweden have been thinking well about digital currencies and that the Boston Fed has been exploring the possibility for the United States as well. The Fed – and especially its chairman Jerome H. Powell – knew that, given the important role of the US dollar in the global economy, it would be very cautious about entering the digital currency area.
Some smaller central banks were more experimental. The Bahamian central bank introduced the sand dollar, a digital currency of the central bank, last year.