Former VanEck advisor Gabor Gurbacs has sparked a provocative discussion about the Federal Reserve’s potential adoption of Bitcoin, suggesting it could serve as a hedge against the central bank’s own policies.
The conversation was ignited by U.S. Senator Cynthia Lummis’s recent announcement at the Bitcoin 2024 Nashville conference. Lummis outlined a plan to convert surplus reserves from twelve Federal Reserve banks into Bitcoin over the next five years.
When former Wall Street Journal reporter Paul Vigna questioned the rationale behind moving Fed funds from “the safest asset in the world, Treasuries, to the most volatile one, Bitcoin,” Gurbacs offered a compelling perspective.
The logic behind the Fed acquiring Bitcoin instead of U.S. treasuries is predicated on the fundamental difference between the two assets: one can be printed and the other cannot.
This is essentially a hard asset acquisition strategy, similar to what central banks do with gold.… https://t.co/7ntgPJPmvc
— Gabor Gurbacs (@gaborgurbacs) July 28, 2024
“Essentially it’s a hedge against themselves, which most central banks do, largely with gold today.”
Gurbacs explained. This strategy, according to Gurbacs, could help the Fed diversify its holdings and potentially protect against inflation and monetary instability resulting from its own policies.
He also emphasized the fundamental difference between U.S. Treasuries and Bitcoin: the former can be printed at will, while the latter has a fixed supply.
Gurbacs framed the potential adoption of Bitcoin by the Fed not just as an investment strategy but as a self-imposed check on its monetary power. By holding an asset it cannot control or inflate, the Fed would be creating a counterbalance to its ability to expand the money supply.
The concept of a central bank hedging against its own actions is not entirely new. Central banks have traditionally held gold as a hedge against currency devaluation and economic uncertainties. Gurbacs suggests that Bitcoin could serve a similar function in the digital age, providing a store of value independent of the Fed’s monetary policies.
Notably, Senator Lummis has reportedly been quietly drafting a bill to recognize Bitcoin as a mainstream financial asset and actualize the plan she described at the conference. However, the exact details of the bill remain undisclosed.
If you want to read more news articles like this, visit DeFi Planet and follow us on Twitter, LinkedIn, Facebook, Instagram, and CoinMarketCap Community.
“Take control of your crypto portfolio with Markets PRO, DeFi Planet’s suite of analytics tools.”
