However, the financier believes the United States should not lead the way, given the dollar’s role as the world’s reserve currency.
Patrick Harker, President of the Federal Reserve Bank of Philadelphia, has claimed central bank digital currencies are inevitable.
According to a Reuters report on Oct. 2, he told a community banking conference: “It is inevitable… I think it is better for us to start getting our hands around it.”
Not in the near future
Harker made his remarks in response to a question about the Federal Reserve’s decision to develop its own instant payments system – known as FedNow – that was announced at the beginning of August. He said:
“I am looking at the next five years after that. What comes next? I do think it is something around digital currency.”
As Cointelegraph recently reported, banks at the Federal Advisory Council have told the Federal Reserve that Facebook’s crypto project Libra will potentially create a “shadow banking” system – risking a potential decline in demand-deposit accounts and bank payment volumes.
State-Backed German Bank Says Bitcoin Will Leap to $90,000 in 2020
The German bank BayernLB has published a report on Bitcoin vs gold in which it predicts a big leap for BTC in 2020.
Bitcoin outshining gold?
On Oct. 1 the Munich-based bank BayernLB published its latest research report that seems to suggest that the forthcoming Bitcoin halving effect hasn’t yet been priced into its current price of around $8,300.
The German bank explains that gold has had to earn its high stock-to-flow ratio “the hard way over the course of millennia.” Bitcoin, on the other hand, will most likely succeed to obtain a similar stock-to-flow ratio to that of gold in the coming year, the report predicts.
Senior FX analyst at the Bayerische Landesbank and author of the research report Manuel Andersch, identities the stock-to-flow ratio of an asset as a way to quantify the “hardness” of the asset. Andersch said:
“Historically speaking, it has invariably been the commodity with the highest stock-to-flow ratio at that juncture which has been used as money because this enabled the best value transfer over time.”
The stock-to-flow ratio of a commodity such as gold is the amount of the asset that is held in reserves, divided by the amount of the asset produced annually.
The author concludes the report by looking at Bitcoin’s future price, by saying that Bitcoin’s stock-to-flow ratio is certain to drastically increase in May 2020, adding:
“If the May 2020 stock-to-flow ratio for Bitcoin is factored into the model, a vertiginous price of around USD 90,000 emerges. This would imply that the forthcoming halving effect has hardly been priced into the current Bitcoin price of approximately USD 8,000.”
Gold bug pounces on Bitcoin price drop
Clearly not everyone will agree with BayernLB’s price prediction. Cointelegraph previously reported that gold bug Peter Schiff returned to bashing Bitcoin as it fell from $9,700 to a low of $7,990 in hours. The Bitcoin critic claimed the shedding of $1,800 was just the start, saying:
“Bitcoin has finally broken below the support line of the large descending triangle it has been carving out for months. This is a very bearish technical pattern, and it confirms that a major top has been established. The risk is high for a rapid descent down to $4,000 or lower!”
