The governor of the Bank of England, the country’s central bank, has voiced concerns about El Salvador choosing bitcoin as a national currency. Citing a recent warning by the International Monetary Fund (IMF) against bitcoin’s use as legal tender, the governor said: “What would worry me most of all is, do the citizens of El Salvador understand the nature and volatility of the currency they have.”
Bank of England’s Governor Is Concerned About Bitcoin Being Legal Tender in El Salvador
Bank of England (BOE) Governor Andrew Bailey raised concerns about bitcoin being used as legal tender in El Salvador while speaking at the Cambridge University student union Thursday. Bailey explained:
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.
El Salvador passed a bitcoin law making the cryptocurrency legal tender alongside the U.S. dollar in September.
Governor Bailey added that the International Monetary Fund (IMF) is not happy that El Salvador has made BTC legal tender.
The IMF told El Salvador last week that bitcoin “should not be used as a legal tender.” Citing “bitcoin’s high price volatility,” the Fund stated that the use of BTC “as a legal tender entails significant risks to consumer protection, financial integrity, and financial stability.” In addition, “Its use also gives rise to fiscal contingent liabilities.”
The IMF’s warning came one day after El Salvador’s president, Nayib Bukele, announced a plan to build the world’s first “bitcoin city” powered by a volcano and financed by bitcoin bonds.
Despite the IMF’s warning, El Salvador bought 100 more bitcoins, taking advantage of Friday’s crypto sell-offs following reports of a new Covid-19 variant.
Governor Bailey also commented on the Bank of England’s work to determine whether to issue its own central bank digital currency (CBDC). He emphasized:
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.
The Salvadoran president responded to the concerns raised by the governor of the Bank of England via Twitter Saturday.
He wrote: “Bank of England is ‘worried’ about El Salvador’s adoption of bitcoin? Really? I guess Bank of England’s interest in the well-being of our people is genuine. Right? I mean, they have always cared about our people. Always. Gotta love Bank of England.” Bukele further tweeted:
I’m really concerned about Bank of England printing money out of thin air.
What do you think about Andrew Bailey’s comments? Let us know in the comments section below.
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