World Bank Disagree With El Salvador Who Choose To Legalize Bitcoin As A Legal Currency – The World Bank rejected a request from El Salvador to help the country make Bitcon a legal tender on “environmental and transparency” grounds.
This international lending institution highlights concerns over transparency and the environmental impact of Bitcoin mining.
Earlier this month, the Central American nation announced plans to become the first country to legally adopt a digital currency. It aims to use Bitcoin as a means of payment like the use of US dollars. The World Bank’s decision could mean El Salvador will have a hard time ensuring that Bitcoin can be used within the next three months.
World Bank Disagree With El Salvador Who Choose To Legalize Bitcoin As A Legal Currency
“We are committed to assisting El Salvador in a number of ways, including for currency transparency and regulatory processes,” a World Bank spokesman told Reuters news agency in an email. “Meanwhile, the government has approached us, to help with Bitcoin. But this is not something the World Bank can help with, given environmental and transparency concerns,” he added.
This statement was issued after El Salvador’s Finance Minister, Alejandro Zelaya said that they asked the World Bank for technical assistance regarding the implementation of digital currency or cryptocurrency as a legal payment method.
Zelaya also said that discussions with the International Monetary Fund (IMF) had been successful. The IMF, he said, was “not against” the adoption of Bitcoin. But at the end of last week, the IMF said it appeared to be related to “macroeconomic, financial and legal issues” if El Salvador adopted Bitcoin.
Last weekend, El Salvador became the first country in the world to officially classify Bitcoin as legal tender. Congress approved President Nayib Bukele’s proposal to make this digital currency or cryptocurrency part of the means of payment.
President Bukele said the government had made history, and that it would make it easier for Salvadorans living abroad to send their money back home. Under this rule, Bitcoin will become legal tender, such as US dollars within 90 days of obtaining approval from Congress.
With this new regulation, it means that businesses in the country must accept Bitcoin as a legal tender for both goods and services, unless there is no technology that can support transactions with Bitcoin. El Salvador’s economy is largely influenced by remittances, or receipts of money from abroad. This money transfer has accounted for 20% of gross domestic product (GDP).
More than two million Salvadorans live abroad, but they retain close ties to their homeland. These migrants annually send money to their hometowns of $4 billion.
If Bitcoin or other cryptocurrencies are widely adopted, the entire banking system may become irrelevant. Although this sounds like a brilliant concept given the recent behavior of the banking industry, every story has two aspects. Without a bank, who would you call when your mortgage payment was hacked? How will you earn interest from your savings? When asset transfer fails or technical failure occurs, who will assist?