The governor of the Bank of England, Andrew Bailey, has expressed reservations over El Salvador’s decision to recognize Bitcoin as legal cash. The bank’s CEO voiced alarm about the cryptocurrency market’s volatility and questioned if Salvadorans are even aware of the dangers their government is taking.
Bailey was speaking at the Cambridge University student union about his thoughts on the cryptocurrency market, which has become a source of concern for numerous governments across the world owing to its uncontrolled and decentralized character.
“The fact that a country would select it as its official currency worries me. What concerns me the most is if El Salvador’s population are aware of the nature and volatility of their currency.” Bailey was cited as saying in a story by news outlet City AM.
Bailey’s remarks come as the United Kingdom considers introducing a national digital currency.
“We believe there is a solid justification for digital currencies, but they must be robust, especially if they are used for payments.” That is not the case with crypto assets, according to the bank’s CEO.
Cryptocurrencies are currently unregulated by any bank or financial institution. Cryptocurrencies like Bitcoin and Ether can easily permit instant and untraceable cross-border financial transactions. Several countries, including India, South Korea, and the United States, are looking at methods to regulate the cryptocurrency market.
The International Olympic Committee (IOC) had its annual meeting in November.
The International Monetary Fund (IMF) had previously urged El Salvador against implementing Bitcoin as its official currency in November.
“Because of Bitcoin’s tremendous price volatility, it poses major dangers to consumer protection, financial integrity, and financial stability if it is used as legal money.” It also creates fiscal contingent liabilities as a result of its use. Bitcoin should not be used as legal money because of these concerns, according to the IMF.
Meanwhile, El Salvador’s president, Nayib Bukele, has pushed for further use of Bitcoin in the Central American country.
At the time of writing, El Salvador had about 1,220 Bitcoin tokens valued at over $70 million (around Rs. 524 crores). Since September of this year, Bitcoin has been accepted as legal money alongside the US dollar in El Salvador.
In addition, more than 200 Bitcoin ATMs have been placed around the country.
Bukele recently unveiled his ambitions to establish a “Bitcoin City” at the base of the Conchagua volcano to use renewable energy to power Bitcoin mining.
Meanwhile, other minor nations such as Tonga and Palau are debating whether or not to make Bitcoin a legal tender, so that remittances from non-residents working overseas are not subject to service fees deducted by money transfer companies.