US President Donald Trump has announced the removal of Federal Reserve Governor Lisa Cook, sparking concerns about the stability of the US dollar.
On Tuesday, the White House Rapid Response X account shared a letter from Trump officially dismissing Cook from her position at the Federal Reserve. In the letter, he accused her of making false statements regarding one or more mortgage agreements and directly addressed her, stating:
“I have determined that faithfully executing the law requires your immediate removal from office.“
According to an Associated Press report on Tuesday, Cook stated that she would not resign. She argued that Trump’s attempt to remove her “for cause” is unfounded, asserting that “no cause exists under the law” and that he “has no authority” to dismiss her. She affirmed her stance, saying she “will not resign.”
The Federal Reserve’s independence is essential
The Federal Reserve operates with a considerable degree of independence from the US government. Alex Obchakevich, founder of Obchakevich Research, told Cointelegraph that this independence “forms the foundation for the stability of the US economy.” He elaborated:
“It ensures objective monetary policy, like rates, inflation without politics, maintaining investor confidence and preventing crises. Without it, there is a risk of manipulation and economic instability, as in authoritarian countries.“
Obchakevich suggested that Trump’s decision to remove Cook was driven by “political reasons” and that it weakens the Fed’s independence. He warned that this could heighten market uncertainty and dampen economic confidence, adding:
“This causes volatility, a weakening of the dollar and a threat to its reserve role with the risk of recession.“
When asked if Bitcoin could serve as a potential solution, Obchakevich noted that, over the long term, “Bitcoin could weaken the dollar’s role as a reserve currency.” However, he added that Bitcoin does not seem to be a viable short-term solution.
Trump’s Conflicts with the Federal Reserve
The news comes amid ongoing tensions between Trump and the Federal Reserve’s leadership. In mid-April, Trump criticized Federal Reserve Chair Jerome Powell for allegedly moving too slowly on interest rate cuts during a US-initiated trade war.
He even suggested terminating Powell, stating, “Powell’s termination cannot come fast enough!”
Market experts quickly dismissed the notion. Renowned crypto entrepreneur Anthony Pompliano argued that Trump should not act on his threat, saying, “I do not believe that the president of the United States should come in and unilaterally fire the Fed chair,” and warned it would set a dangerous precedent.
US Senator Elizabeth Warren similarly cautioned that firing Powell could erode investor confidence in US capital markets and potentially trigger a financial crisis.
