Zoltan Pozsar, who until recently worked as a managing director of the investment bank Credit Suisse, offered his insight into the financial markets and the issues that weaken the dominance of the dollar around the world.
In his role at Credit Suisse, Pozsar’s understanding of the ins and outs of the legacy financial system and market dynamics is highly sought after. His recent departure from the bank came shortly after it was bought by UBS in March in an attempt to prevent it from collapsing amid ongoing turmoil for banks around the world. On the stage of Bitcoin 2023, Pozsar addressed how the US banks will be affected.
“This is basically a period where the big banks are more and more removed from the problems,” Pozsar said. “These are basically lessons of not being able to run the risk of the interest rate, not knowing how to make a loan that can withstand a rising interest rate storm.”
He described the Federal Reserve’s responses to these bank failures as only addressing “half the problem.”
“I think it’s like foaming at the runway for any big banks that might have problems down the road,” he added.
Pozsar was interviewed on stage by BitMEX co-founder Arthur Hayes, who pressed him on whether he had any bitcoin.
“I don’t own one,” Pozsar replied. “I’m keeping an eye on it. I don’t like to dabble in things I don’t fully understand.”
Pozsar describes his pessimism that bitcoin can actually serve as money, because his historical research shows him that money must have a direct link to a government in order to survive. As a fundamentally decentralized, peer-to-peer network, Bitcoin cannot support a currency that matches its definition.
“The one thing I would say about bitcoin is that the currency, if you will, is something that is purely public or a public-private partnership,” Pozsar explained. “When I look at Bitcoin, it is a private initiative. It clearly lacks a link to the state. But again, things are improving, there are many countries that have adopted bitcoin as a legal tender, so things are definitely changing there.
In his writing, Pozsar highlighted the evolving role that Bitcoin is playing around the world as institutionally backed currencies like the US dollar become weaker. In Bitcoin 2023, he listed several trends in the world market, including the rise of China’s economic power, which threatens its role as a global reserve currency.
“There are a number of changes that are happening that I think we need to keep an eye on because they will all be spent on the dollar side of commodity finance, trade finance, in terms of reserve assets and so on,” said said Pozsar.