What would the late former Federal Reserve Chair Paul Volcker have thought about digital currencies issued by central banks?
The short answer is nobody knows; Volcker never really got steeped in the fast-developing world of crypto.
“Bitcoin? What’s that?” Volcker replied when asked about the largest cryptocurrency by a Quartz reporter in April 2013. “I’m too old to know anything about that.”
The question is worth asking, though, since Volcker, who died this week at 92, is regarded as perhaps the most effective and credible Fed chief of the past half century.
Volcker led the U.S. central bank from 1979 through 1987 and is known primarily for jacking up short-term interest rates to as high as 20 percent to short-circuit double-digit inflation.
The aggressive move helped to push the U.S. into recessions in the early 1980s, driving the unemployment rate to nearly 11 percent from 6 percent and drawing outcry and pushback from corporate executives, unions and lawmakers. But by the mid-1980s, the inflation rate dropped back below 2 percent, and the economy resumed its growth.