Donald Trump’s plans to create a bitcoin strategic reserve pumped up the crowds in Nashville this weekend — and lifted the cryptocurrency too. Still missing was any logic to the presidential hopeful’s verbiage.
Cash and gold reserves typically provide stability for countries with non-US dollar currencies. When financial or other crises hit, it helps to have a store of emergency dollars to cover (US dollar denominated) import bills or shore up the home currency. That need hardly arises when you are the reserve currency and can simply print more.
In any case, being a force for stability is a tough ask for a volatile asset. Emerging markets would have struggled to weather bank runs if they had stacked their FX reserves with their neighbour’s equally weak currencies — Mexican pesos for Argentina, say.