Yellen Shrugs Off Bitcoin as “Full-Blown Financial Stability Risk.” In Other Words, No Fed Bailout when Prices “Fluctuate”
by Wolf Richter
WolfStreet.com
Dec 13, 2017
As long as banks are not exposed to bitcoin.
Bitcoin, after ludicrously dominating the financial media, even invaded the Federal Open Market Committee’s press conference on Wednesday. During the Q&A, Fed Chair Janet Yellen was asked about bitcoin by three different emissaries from major media operations.
Those weren’t questions about bitcoin itself but about the broader “cryptocurrency” mania – “cryptocurrency” in quotes because bitcoin doesn’t, as Yellen put it so elegantly, “constitute legal tender” – and the risk it might pose to “financial stability.”
This is code for a distinction: When “financial stability” is at risk, when the banking system is on the verge of collapse or when credit is freezing up or some such thing, the Fed will step in; if financial stability is not at risk, the Fed will let it go. Here’s what Yellen said:
“Bitcoin at this time plays a very small role in the payment system, it’s not a stable store of value, and it doesn’t constitute legal tender.
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