Andrew Bailey, the Bank of England Governor, has termed El Salvador’s decision of adopting Bitcoin as legal tender “concerning.” He also added that its volatility would catch out citizens and users of BTC in El Salvador.
BTC’s Volatility A Significant Risk
The Governor made the comments while responding to questions during a Cambridge University students union.
“It concerns me that a country would choose it as its national currency. What would worry me most of all is, do the citizens of El Salvador understand the nature and volatility of the currency they have.”
He also stated that the International Monetary Fund (IMF) is also unhappy with El Salvador’s decision to adopt Bitcoin as legal tender.
Bank Of England Exploring Digital Currencies
Bailey also stated that the Bank of England was studying digital currencies and whether it should create its own digital currency system to help facilitate online payments and allow customers to access a secure way of holding their assets.
“There is a strong case for digital currencies, but in our view, it has to be stable, particularly if it’s being used for payments. That is not true for crypto assets.”
El Salvador’s Bitcoin Tilt
El Salvador became the first country to legalize Bitcoin and declare it as legal tender. The president of El Salvador, Nayib Bukele, claimed that this move would allow a significant portion of Salvadorans to access banking and financial services. It would also allow them to save around $400 million in fees when sending remittances back home from other countries.
El Salvador’s parliament approved the proposal in June, allowing Bitcoin to be accepted as a mode of payment for goods and services in the country.
Salvadorans Cagey About Bitcoin
Despite Bukele’s conviction, opinion polls on the ground seem to paint a different picture, stating that a majority of El Salvador’s population rejects the idea of BTC and would continue to use the US Dollar, which has been El Salvador’s legal currency for 20 years.
Several economists, and international organizations such as the International Monetary Fund, World Bank, and Inter-American Development Bank, have all expressed concern regarding the adoption of Bitcoin by El Salvador. Cryptocurrencies have seen a significant increase in popularity, despite furious debate around their status in government and financial circles.
IMF Highly Critical Of El Salvador
The International Monetary Fund (IMF) is still highly critical about El Salvador’s decision to adopt Bitcoin as legal tender, pointing at issues related to consumer risk. El Salvador went ahead and legalized Bitcoin at the start of 2021, despite strong opposition from the IMF.
The IMF, stepping up its criticism directed towards El Salvador, released a statement emphasizing the dangers of the legalization of Bitcoin on Monday.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.