Bianco Research CEO: Cryptocurrency will be a suitable reserve asset

In a recent interview on the 17th by the co-founder of renowned investment firm Morgan Creek, Pompliano, he invited Jim Bianco, the macro strategist and CEO of Bianco Research, a financial analysis firm. They discussed the current economic situation, how monetary policies will drive future trends in the financial markets, and Jim Bianco's belief that cryptocurrency is the next global reserve asset.

The Dollar Still Cannot Be Replaced

Bianco Research, founded in 1998, with its president Jim Bianco often featured in mainstream media such as Bloomberg, The Wall Street Journal, and FOX, covers a wide range of topics including monetary policy and financial markets. In a podcast on the 17th, he stated:

Currently, there are no other global fiat currency options that can replace the position of the US dollar. However, theoretically, I believe the next reserve currency will be a cryptocurrency.

Global reliance on the US dollar is currently very high, primarily still viewed as a reserve currency. Commodities such as gold and oil are priced globally in dollars. Jim Bianco stated:

Ninety percent of the world is in dollars. If you're a Chinese person and you want to trade Brazilian lumber, most quotes are in dollars for settlement.

Given the global outbreak of the novel coronavirus, Pompliano also mentioned whether the public will start looking for another reserve currency outside of government and mainstream structures. Jim Bianco responded: I think they have been desperately looking for an alternative for ten years, but no other fiat currency is sufficient to replace the dollar. He pointed out:

Cryptocurrencies will be the next reserve currency. Facebook's Libra project seemed like a competitor last year, but then Libra faced huge backlash from governments around the world because digital currency systems could threaten the current system. The next global reserve currency may not yet exist in the world, but I believe cryptocurrencies will become a suitable reserve asset. It should serve as a medium of exchange, a tool for storing value, and should exist outside of government control.

In Search of the Next Reserve Currency

Throughout history, every hundred years or so, the dominant financial power will change hands, and the global reserve currency system will also change. After World War II, the Bretton Woods system made the dollar the center of its system, subsequently becoming the global reserve currency.

Prior to the dollar, the pound, which accounted for 60% of global trade in the 19th century, was the global currency. And due to the Dutch East India Company's monopoly on global trade, the Dutch guilder (ANG) dominated the 18th century.

The digital age is highlighting the shortcomings of physical currencies in functionality, and economic downturns are testing the credibility of fiat currencies. As reported recently, the release of the Libra 2.0 whitepaper and China's pilot program for the digital Renminbi (DCEP) demonstrate that the world is on the brink of a new wave of financial revolution.