Key Takeaways:
- El Salvador’s acceptance of bitcoin is a source of concern, as per the Bank of England chief, because BTC’s volatility would likely catch users off the edge.
- “It worries me that a country would choose it as its national currency,” Bailey commented in answer to a question at a Cambridge University student union appearance on Thursday.
El Salvador became the first country to recognize bitcoin as legal money in September 2021. The government of President Nayib Bukele argues that this would offer many Salvadorans for the first time access to banking services and save $400 million in fees on remittances sent home from abroad each year.
According to Bloomberg, Bank of England Governor Andrew Bailey termed El Salvador’s plan to use Bitcoin as its currency “concerning,” stressing that consumers “will probably be caught out by its volatility.”
The choice to utilize bitcoin as its currency was alarming since its unpredictability is likely to catch people off guard.
“It concerns me that a country would choose it as its national currency,” Bailey remarked in answer to a question at a Cambridge University student union appearance on Thursday. “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 was particularly controversial with the International Monetary Fund (IMF), according to Bailey. The International Monetary Fund (IMF) keeps track of global financial market risks.
The BOE was also considering developing its digital currency system to promote fast online payments and provide clients with a secure and technologically advanced means to store cash.
“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. Unfortunately, that is not true for crypto assets.”
In June, El Salvador’s parliament passed a bill allowing crypto money to be recognized as tender alongside the US dollar for all products and services in the small Central American country.
Economists and international organizations such as the World Bank, the International Monetary Fund, and the Inter-American Development Bank are highly concerned about El Salvador’s acceptance of bitcoin.
