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Jim Bianco, president and macro strategist of finance analysis firm Bianco Research, says he believes a cryptocurrency will replace the US dollar as the world’s reserve currency.
In an interview on the Pomp Podcast with host and Morgan Creek Digital partner Anthony Pompliano, Bianco explains why the dollar remains the primary fuel for global economies and financial markets.
“Remember that the dollar is the reserve currency. What that means is 90% of world trade is in dollars. We quote the price of crude oil in dollars, we quote the price of gold in dollars…
When you get into a crisis, everybody looks around and goes, ‘what currency do I want to be in?’ and the answer is, ‘I want to be in the reserve currency. I want to be in dollars’. There’s this giant need for dollars, the safe haven currency, and because it’s the thing that we do trade with.”
Bianco, however, says that people have been looking for a better reserve currency over the past 10 years since the dollar is far from perfect.
“To quote Winston Churchill, the dollar is the worst reserve currency we’ve ever devised, except for every other one, and so it benefits that there is no alternative. You’re not going to, you know, wave a wand and say the euro or the yen or the pound.”
Because no other fiat currency can fill the bill, Bianco thinks that the next reserve asset will be in crypto.
“I’ve argued that, in theory, the next reserve currency will be a crypto.
I thought maybe Libra would do it, but then I thought for sure I was onto something because the first thing they did when they announced Libra was they dragged Marcus in front of Congress and ripped him a new one because they were afraid of what Libra represented.”
But after backlash and unrelenting criticism from lawmakers, Libra is now no longer what it was originally conceived to be: a single global stablecoin backed by a basket of multiple currencies.
Bitcoin is currently the largest cryptocurrency by market cap, but Bianco says the king coin does not have what it takes to be the next reserve asset.
“It probably doesn’t exist yet. I don’t know when it will exist or which one it will be because it needs to be both a medium of exchange and a store of value. Bitcoin might be a store of value, but it’s not a real good medium of exchange… Maybe there’s some others like Ether or something that you could argue as better medium of exchange, but they’re not a good store of value…
I do think it’s coming, but it still could be many years down the road right now. Maybe it exists in some infancy form right now whichever crypto is going to be it ,or maybe it’s still to be invented.”
You can check out the full interview here.