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Cryptocurrency : bitcoin is not a solution for El Salvador

The president of the Inter-American Development Bank (IDB) Mauricio Claver-Carone believes that the adoption of bitcoin (BTC) in El Salvador as a legal currency will not help boost the economy and warns of the risks posed by “volatility” in the cryptocurrency price.

The statements of the head of the international financial organization were published this Wednesday, June 23 by the El Mundo newspaper of El Salvador. With this opinion, Claver-Carone joins to the negative remarks that multilateral organizations such as the World Bank and the International Monetary Fund have made about the Bitcoin Law, which have been reviewed by CriptoNoticias.

According to the executive, “what the Government of El Salvador is looking for is how to facilitate transactions, how to facilitate trade and how to do it in a transparent and secure way, but bitcoin is not the solution.”

Claver-Carone then softened his position on this issue by saying that the intentions of the Executive of El Salvador are good. The IDB president highlighted that a law of this type must be studied in depth and he even highlighted the advantages of the use of “blockchain technology” that the Bank encourages, which are currently applied in the Caribbean, he said.

The highest representative of the international financial organization based in Washington dropped a pearl on the use of bitcoin in the North American nation: “I consider that bitcoin is a speculative resource, since for a country like El Salvador -whose comparative advantage is monetary stability due to dollarization – it’s complicated and would add unnecessary volatility to that system.

Promote bitcoin for sending and receiving remittances

It is worth remembering that the Legislative Assembly of El Salvador approved the Bitcoin Law “via express” last Tuesday, June 8, 2021. The approval of the regulations had the votes in favor of 62 of the 84 deputies, as this media outlined.

In the document it can be read that bitcoin may be used “in any transaction and to any title that natural or legal persons, public or private, require to carry out.” In this way, not only individuals and companies will be empowered to use bitcoin as currency, but also public administration bodies and other state entities. It also establishes that “every economic agent must accept bitcoin as a form of payment when it is offered to him by whoever acquires a good or service.”

President Nayib Bukele’s plan is promote bitcoin as a means of sending and receiving remittances, under the premise of a lower cost in transactions.

Between May 2020 and the same period in 2021, the amount of money from remittances with bitcoin quadrupled. Last year, during that month, the amount was about $ 424,000, While, in May of this year, there were more than 1.7 million dollars in remittances received in the Central American country through BTC.

International organizations ask for caution on the bitcoinization of El Salvador

Both the IDB and the World Bank ask for caution on the issue of “bitcoinizing” the Salvadoran economy, while the IMF has made its concerns public. The World Bank denied the technical assistance requested by El Salvador in its plans to adopt BTC as legal tender. The agency considers that it cannot support the implementation of cryptocurrency in the country’s economy due to the environmental and transparency deficiencies that, according to them, implies.

Meanwhile, Gerry Rice, a spokesman for the International Monetary Fund (IMF), said that “the adoption of bitcoin as legal tender raises a number of macroeconomic, financial and legal problems.”

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