After the IMF raised concerns about El Salvador adopting Bitcoin (BTC) as a legal tender last week, the World Bank has rejected any kind of help for Bitcoin implementation citing transparency and environmental concerns.
On Wednesday, June 16, El Salvador’s Finance Minister Alejandro Zelaya said they are currently seeking technical assistance from World Bank to make Bitcoin a legal tender along with the existing USD.
Besides, the minister also called current negotiations of the International Monetary Fund (IMF) ‘successful’. However, the IMF has already raised legal and macroeconomic issues concerning Bitcoin adoption. In an email to Reuters, the World Bank spokesperson wrote:
“We are committed to helping El Salvador in numerous ways including for currency transparency and regulatory processes. While the government did approach us for assistance on bitcoin, this is not something the World Bank can support given the environmental and transparency shortcomings.”
On the other hand, the Central American Bank for Economic Integration (CABEI) is ready to help El Salvador in its Bitcoin implementation. CABEI Executive President Dante Mossi has also assured technical assistance while working closely with the El Salvador Finance Ministry and central bank.
Economist Steve Hanke: Adopting Bitcoin (BTC) Can Collapse El Salvador’s Economy
Steve Hanke, an economist and professor at Johns Hopkins University, has raised serious concerns over El Salvador’s decision to make Bitcoin a legal tender. During his interview with Kitco News, he called this decision “stupid”.
Considering the state of El Salvador’s economy, Hanke believes it is not feasible to use Bitcoin in everyday transactions. Hanke added:
“The big problem with cryptos, in general, is that you can’t convert them into actual real legal tender that’s usable cheaply, and quickly. You can’t Bitcoin, for example, cheaply and easily convert into U.S. dollars.”
If this problem aggravates further, Hanke believes that the country will be drained of the U.S. Dollar with BTC transactions and the entire economy could “collapse”.
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.