Bitcoin’s current dump to $54k has made the Bank of England (BOE) question its adoption. The Governor, Andrew Bailey, said that El Salvador’s choice to adopt Bitcoin as a currency is risky because of its high volatility.
Andrew Bailey said that the bank is studying to create its digital currency. This was on 25 November. However, the bank is concerned as to why anyone would choose Bitcoin as a national currency. While responding to questions during a Cambridge University students Union, Bailey said that what worries them the most is that the citizens of El Salvador do not understand the nature of the volatility of Bitcoin.
The International Monetary Fund (IMF) is unhappy too with El Salvador. IMF is a global institution that monitors the financial markets and economic states of countries. The digital currency BOE is looking to help stabilize the cryptocurrency markets by allowing for a smooth, secure, and technologically advanced method for holding cash. All the ways help prevent volatility.
According to BOE, there is a strong case for digital currency. However, it has to be stable, especially if used for daily payment activities like fiat. However, this is not true for cryptocurrency assets.
El Salvador and Bitcoin
Nayib Bukele, the president of El Salvador, is behind the legalization of the crypto coin. El Salvador became the first state to legalize Bitcoin officially in its legal tender in September 2021. Its government claims that the adoption will help give many Salvadorans access to bank services for the first time.
It will also help save about $400 million of fees on remittance outside citizens sent home from abroad each year. In addition, El Salvador’s parliament approved a law in June to accept Cryptocurrency as a tender for all goods and services in the small Central American nation, together with the US Dollar.
Rejection of the Dollar Cryptocurrency Adoption
Despite BOE’s perspective, opinion polls show that the 6.5 million citizens of El Salvador reject the idea of continually using the dollar, the country’s legal currency, for the last 20years. This is according to a report by AFP. The country has even started a Bitcoin City. International bodies and economists such as the World Bank, Inter-American Development Bank, and IMF have expressed concerns about El Salvador’s Bitcoin adoption.
Crypto has grown immensely since 2008, with Bitcoin as the pioneer. A state going out of its way and taking a risk by adopting Cryptocurrency is not entirely foolish. A state has analysts, scientists, Cryptocurrency, and blockchain experts.
El Salvador also holds conferences, LABITCONF, to educate its citizens on the positive and negative aspects of Bitcoin and how to thrive in the cryptocurrency market. The president and the nation will become one of the wealthiest nations in the next era, while the global transition after the pandemic is complete.
No country can risk Cryptocurrency and go bankrupt. It is the technology ushering in a new era, also a currency. Early investment in global transition has made many people rich. Therefore, everybody is early to Bitcoin, and inflation is the problem, not volatility.