January 20, 2022

BoE Governor Expresses Caution Over El Salvador’s Acceptance Of Bitcoin

Two months since El Salvador made history by becoming the first government in the world to recognize Bitcoin as official legal cash, advocates of the financial system are still not convinced that Bitcoin is a good idea.

According to Bloomberg, the director of the Bank of England, Andrew Bailey, recently expressed his worries about the adoption during a speech at a conference.

Bailey attended the Cambridge University student’s union, where he answered questions from the audience during the session. He expressed worry about the introduction of Bitcoin in El Salvador, stating that naïve users may be severely harmed by the currency’s volatility. He expressed his dissatisfaction with the fact that a nation would adopt it as its official currency.

The IMF’s Stance On The Crypto Adoption 

Bailey also went on to say that what he would be most concerned about is whether or not the residents of El Salvador understood the nature and instability of the currency.

The IMF, which is in charge of monitoring the world’s economic risks, has also declared that it does not support El Salvador’s choice, he continued. In recent years, the International Monetary Fund (IMF) has expressed concern over the use of Bitcoin as legal money.

Even while it had previously kept its warnings under wraps, it publicly called out the government for its monetary and fiscal policies earlier this week. Specifically, it advised that the country limit the reach of its Bitcoin legislation while enhancing the regulation and oversight of the country’s recently developed payments infrastructure.

CBDCs Over Bitcoin

As Bailey previously stated, complaints about Bitcoin should not be concluded to be hostility toward the technology. The Governor announced that the Bank of England was also looking into the possibility of developing its digital currency transaction system, known as the Digital Pound.

It has the potential to make online payments more seamless while also providing users with “a safe and technologically advanced method to retain cash.” He went on to say that there is a compelling argument for digital currencies, but that they must be reliable to be effective, particularly if they are used for payments. And that is not the case with cryptographic assets.

El Salvador became the first nation to legitimize Bitcoin in September 2021, amidst a wave of both endorsements and critiques from around the world.

Even though public opinion polls on the transition have managed to remain particularly bad, the nation has continued to build its Bitcoin facilities by raising its holdings, upgrading its payment services, and even establishing a Bitcoin City, which is funded by a $1 billion Bitcoin bond, among other things.

When it comes to Bailey, the banker has expressed similar reservations about the cryptocurrency industry on a number of previous occasions. He had previously stated that fraudsters were increasingly utilizing virtual assets and payment mechanisms to make illicit transactions earlier this month.