Zoltan Pozsar discusses Fed and dollar challenges at Bitcoin 2023 after leaving Credit Suisse

Zoltan Pozsar, who was previously the managing director of investment bank Credit Suisse, shared his thoughts on financial markets and the factors that are diminishing the dominance of the US dollar worldwide.

During his time at Credit Suisse, Pozsar was highly regarded for his understanding of the legacy financial system and market dynamics. He recently left the bank after it was acquired by UBS in an effort to prevent its collapse amidst global banking turmoil. At the Bitcoin 2023 event, Pozsar discussed the impact on US banks.

“This is essentially a situation where the major banks are mostly shielded from the issues,” Pozsar said. “It’s essentially a lesson in not being capable of managing interest rate risk and not knowing how to issue loans that can withstand a rising interest rate environment.”

He criticized the Federal Reserve’s response to these banking failures, saying it only addressed “half the problem.”

“I think it’s more like preparing for any potential problems that the major banks may encounter in the future,” he added.

During an on-stage interview with BitMEX co-founder Arthur Hayes, Pozsar was asked whether he owned any bitcoin.

“I don’t own any,” Pozsar replied. “I’m observing it. I don’t like to dabble in things that I don’t understand well.”

Pozsar expressed doubt that bitcoin could ever truly function as money, arguing that historical research has shown that money must have a direct connection to a government in order to endure. Bitcoin, as a decentralized, peer-to-peer system, cannot support money that fits his definition.

“The one thing I will say about bitcoin is that money, if you will, is something that is purely public or a public-private partnership,” Pozsar explained. “When I look at Bitcoin, it’s a purely-private initiative. It’s clearly lacking a state link. But then again, things are evolving, there are a number of countries that have adopted bitcoin as a legal tender, so things are definitely in flux there.”

In his written work, Pozsar has emphasized the changing role of bitcoin in the world as institution-backed currencies like the US dollar lose their strength. At the Bitcoin 2023 event, he identified several global market trends, including China’s growing economic power, that pose a threat to the US dollar’s role as the global reserve currency.

“There are a number of changes taking place that we need to monitor because they will all reduce the dollar’s share of commodity finance, trade finance, reserve assets, and so on,” Pozsar said.

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