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
During a speech at Cambridge University’s student union on Thursday, Andrew Bailey (BoE Governor) raised concern about Bitcoin being used in El Salvador as legal tender. Bailey explained the following:
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 has passed a law to make bitcoin legal tender in September.
Governor Bailey stated that El Salvador had made BTC legal currency.
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. For crypto assets, this is not the case.
Twitter was the response of Saturday’s Salvadoran President to the Bank of England Governor.
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? They have always taken care of our people. Always. Gotta love Bank of England.” Bukele Further tweets:
I’m really concerned about Bank of England printing money out of thin air.
What do you think about Andrew Bailey’s comments? Please comment below.
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