Ex-Fed Reserve Chair Ben Bernanke Lauds Ripple, Says Bitcoin Will Be Squashed by Governments
Former US Federal Reserve Chairman Ben Bernanke is bullish on Ripple and blockchain payments. Bernanke was speaking as a keynote speaker to a room full of attendees at Ripple's Swell event in Toronto. The three-day event brought together global financial leaders to network and unpack trends and strategies in payments, blockchain, and banking.
Bernanke has often been critical of bitcoin and cryptocurrencies and just like many mainstream bankers, he is confident of the underlying technology. The ex-Fed chair, who led the $16 trillion bailouts of too-big-to-fail corporations in the 2008 financial crisis, spoke of the current broken payments infrastructure. He highlighted an instance of the complexity of sending payments between a German and US bank, saying:
"It's an obvious area where new technologies like blockchain or these electronic currencies can be used to improve the process."
Bernanke picked out Ripple as a great contender, admitting he is aware of the company's work in addressing payments after reading about them. He echoed the sentiments of mainstream bankers on fixing global payments by reducing costs and improving speed, accuracy, and reliability.
Ripple is a bank-friendly blockchain company addressing the problems of traditional payments infrastructure, particularly the developing world. The distributed ledger startup is adamant about going after Swift, a legacy payments provider servicing 11,000 banks around the world.
Responding to questions on a Quora session last week, Ripple CEO Brad Garlinghouse said:
"Our first target is the $55 trillion cross-border opportunity that currently relies on antiquated payment infrastructure and a broken SWIFT messaging system."
Now a distinguished fellow at the Brookings Institute, Bernanke mostly talked about monetary policy, occasionally touching on cryptocurrencies and bitcoin. His present opinion on bitcoin has changed little since his first comments in 2015 when he said: "Bitcoin has serious problems."
On a question and answer session, he underscored the power of governments to ‘quash’ bitcoin if it ever grew large enough to be a significant threat. He said:
"bitcoin is meant to be an attempt to replace fiat currencies and evade government regulation and government intervention. When bitcoin becomes a threat, they [governments] will take whatever action deemed necessary."
Recently, Christine Lagarde conceded digital currencies such as bitcoin were disruptive. The IMF Chief has changed tune in the last month, talking up the potential of virtual currencies as a disruptor just like computers and tablets.
Ben Bernanke, however, was less optimistic of bitcoin and cryptocurrencies that are anti-establishment. He expects blockchain companies that align themselves with governments to flourish in introducing innovative payments systems for mainstream use. Central banks around the world such as the PBOC, Bank of England, and Singapore have been experimenting with blockchains for regulated banking environments.
In the long run, Ben does not expect the rise of bitcoin to have an impact on Central Bank's influence on monetary policy.