Former Canadian Leader Sees Bitcoin Joining Reserve Currency Basket
Gold and Bitcoin could both serve as reserve currencies, with the number of reserve currencies likely to increase—though the US dollar will remain dominant.
Stephen Harper, Canada's Prime Minister from 2006 to 2015, recently stated that Bitcoin and central bank digital currencies (CBDCs) might become part of a diversified basket of reserve currencies that could supplement the US dollar.
The Future of Reserve Currencies
During an interview at the Vancouver Resource Investment Conference, Harper shared his insights:
Challengers to the Dollar: Only major currencies like the euro or yuan could potentially rival the dollar. However, he expressed skepticism due to:
- The euro's long-term value uncertainty
- China's strict control over the yuan's valuation
- Emerging Alternatives: "Gold and Bitcoin could both function as reserve currencies," Harper noted. "We'll likely see more currencies playing this role, but the dollar will maintain its primary position."
- CBDCs Are Inevitable: He added that central bank digital currencies are somewhat "unavoidable," though their adoption may vary based on regional monetary policies.
Canada's Growing Crypto Landscape
Since Harper left office:
- Canada has significantly increased its cryptocurrency and blockchain adoption
- Launched its first regulated crypto exchange in September 2022
- The Bank of Canada is actively researching CBDCs, according to Deputy Governor Timothy Lane
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FAQ: Bitcoin as Reserve Currency
Q: Can Bitcoin really become a reserve currency?
A: While still speculative, Bitcoin's scarcity and digital nature make it theoretically viable as part of a diversified reserve system, especially as nations explore alternatives to traditional currencies.
Q: How would Bitcoin differ from gold as a reserve asset?
A: Both are non-sovereign stores of value, but Bitcoin offers instant global transferability while gold has millennia of established trust and physical presence.
Q: What's preventing wider Bitcoin adoption by nations?
A: Key barriers include volatility, regulatory uncertainty, and the lack of institutional infrastructure compared to established reserve currencies.
Q: How might CBDCs affect Bitcoin's reserve potential?
A: CBDCs could either compete with Bitcoin or create bridges between traditional finance and crypto assets, potentially increasing Bitcoin's legitimacy.
Q: Which countries are most likely to adopt Bitcoin reserves first?
A: Nations with dollarized economies or those facing currency instability (like El Salvador's example) may lead the way in Bitcoin reserve adoption.