Head of Bank of England Concerned About El Salvador’s Bitcoin Experiment
The Governor of Bank of England Andrew Bailey said he is very concerned for the citizens of El Salvador following the country’s adoption of Bitcoin as legal tender. Bailey made the remarks at the Cambridge University students union earlier this week.
According to the banker, the move to adopt Bitcoin within a dual currency system was troubling, while also adding that volatility could have a massive impact.
Bailey has been warning of the “dangers” of cryptocurrency for a while now. In May, he said that cryptocurrencies have no intrinsic value and that investors should be prepared to lose all their money.
The move has greatly divided opinions. Especially the international legacy financial institutions, such as the IMF and World Bank, have naturally their disapproval for a move that leaves them completely outside of the equation.
President of El Salvador, Nayib Bukele, remains committed to his cause explaining that it will bring more jobs, financial inclusion, and foreign investment. Whether or not that it is case time will tell.
Earlier this week, El Salvador announced plans to build a Bitcoin City at the base of the Conchaga volcano located in the southeastern region of the country. Related to this is the issuance of “volcano bonds,” which would provide development funds to the Central American country.
Graham Stock, a Senior Sovereign Analyst at Blue Bat Asset Management, commented on the Bitcoin City plan saying that raising money through Bitcoin could discourage El Salvador from building sustainable spending policies.
The analyst added that El Salvador’s Bitcoin experiment is “an untested strategy,” and that there’s every likelihood that the country will continue to need IMF support.
“Building the economy around crypto mining and attracting crypto businesses is an untested strategy to put it mildly.”
Bailey on El Salvador’s Bitcoin Experiment
According to Bailey it is very worrying that a country would choose to go this route. What worries him most for the citizens of El Salvador due to the volatile nature of Bitcoin.
“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.”
Interestingly all the top international bankers and institutions were not at all concerned on El Salvador’s financial situation, let alone its people, before it adopted Bitcoin.
However, Bailey is not 100% against digital currencies, and said there’s a strong case for them. However, only in the context of a stable currency.
Speaking on the day Bitcoin became legal tender in El Salvador, IOHK CEO Charles Hoskinson framed the situation as a blow for legacy agencies, adding that in many cases, these agencies are “adversial” to everyday people.
“What this does is it legitimizes the belief that we should be in control of the money in our pocket, and we should be ultimately in control of how that money moves and who receives it.”
Regardless what the world thinks, Bukele keeps filling the country’s Bitcoin coffins.
El Salvador just bought the dip.
100 extra coins acquired with a discount ?#Bitcoin ??
