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BoE’s Governor voices concerns over El Salvador’s BTC adoption

By:
on Nov 26, 2021
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  • Per Andrew Bailey, El Salvador exposed citizens to BTC’s volatility by adopting it as legal tender.
  • Bailey claims digital currencies have a strong use case, but cryptos are not stable.
  • El Salvador is pushing ahead with its BTC plans despite increasing resistance and criticism.

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Andrew Bailey, the Governor of the Bank of England (BoE), has found fault with El Salvador’s decision to adopt Bitcoin (BTC/USD) as legal tender. A report unveiled this news on November 25, citing the BoE Governor who spoke after making an appearance at the Cambridge University student union yesterday. In his speech, Bailey noted that the country’s decision exposes citizens to BTC’s volatility.

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The 62-year-old central banker said,

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.

Bailey added that the International Monetary Fund (IMF) is also not happy with El Salvador’s decision. He referred to when the international financial institution refused to back the central American’s BTC move.

At the time, the IMF cited macroeconomic, financial, and legal issues. The IMF reiterated its position two months later, saying El Salvador’s move to embrace BTC is an inadvisable shortcut.

While Bailey admitted there is a strong use case for digital currencies, he said BoE considers stability a key factor, especially if the digital currency is to be used for payments. According to him, cryptocurrencies are not stable.

Bukele’s administration continues pursuing its controversial BTC dream

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El Salvador embraced BTC as legal tender alongside the US dollar on September 7 despite the country’s citizens taking to the streets to protest against the move. Since then, the Salvadoran government has dedicated a lot of effort to buying more BTC. At the moment, the country holds 1,120 BTC, with the latest purchase being in October.

The government also introduced fuel subsidies for Salvadorans that pay through the government-backed Chivo wallet, side-lining users that were not willing to pay in BTC. Citizens cried foul, claiming the government was trying to shove BTC down their throats. Apart from this, El Salvador announced plans to build a Bitcoin city at the base of the Conchagua stratovolcano.

Reportedly, the anti-BTC sentiment in El Salvador stems from transparency issues. For instance, it is not clear who holds the private keys to the country’s BTC wallet. The government has also not issued a clear policy to govern when it buys BTC and the amount it purchases.

While crypto enthusiasts consider the country embracing BTC a bullish development, critics claim President Bukele’s authoritarian record speaks contrary to the principles of BTC. An example was the unlawful arrest of Bitcoin-critic Mario Gomez.

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