World Bank Worried Of Central African Republic’s Bitcoin Legal Tender
The World Bank has expressed concerns about Central African Republic’s (CAR) plan to set up a crypto hub.
End of April, Central African Republic became the second country in the world to make Bitcoin legal tender. The new law made it the first African country to officially adopt Bitcoin as a legal currency. This means that the CAR citizens can use it in commercial activities as well as to pay taxes.
President Faustin Archange Touadera tweeted last week that the country had set up its first crypto initiative dubbed “SANGO” to steer the county’s bitcoin agenda. He commented in a statement following SANGO’s launch on Monday:
“The formal economy is no longer an option. An impenetrable bureaucracy is keeping us stuck in systems that do not give a chance to be competitive.”
The initiative was sanctioned by the national assembly and supported by both the CAR and the president. It seeks to create a crypto-economic zone as well as “create a dedicated legal framework for cryptocurrencies before the end of 2022.”
The plan mentions a $35 million development fund approved on May 5 by the world bank for the digitization of the public sector. Whereas the plan specifically states that “the world bank is not part of the crypto initiative,” the World Bank responded after the suggestion that the CAR could use the approved funds to forerun its crypto initiative.
“The World Bank is not supporting ‘Sango: The First Crypto Initiative Project,” the wrote to Bloomberg, noting that the $35 million digital governance loan was “not related to any crypto initiatives.” It was intended to improve CAR’s public financial management system through funding projects such as the digitization of tax collection and salary payments systems.
The world bank also criticized CAR’s government for downplaying the need to involve relevant financial institutions in its crypto plan.
The World Bank said:
“It is important that relevant regional institutions, such as the central bank and banking authorities, are fully consulted and remain in the driving seat. We have concerns regarding transparency, as well as potential implications for financial inclusion, the financial sector and public finances in general, in addition to environmental shortcomings.”
The response echoes sentiments by the Bank of Central African States which had earlier rebuked CAR’s bitcoin move, saying that it lacks transparency and inclusion in the decision-making process. Monetary rules require prior consultations before modifications, a factor that could adversely affect CAR’s financial inclusion by the regional bank. CAR’s move has also caught the IMF’s attention, which has been skeptical on the inclusion of cryptocurrencies into local monetary systems.
