Andrew Bailey, governor of the Bank of England (BoE) has raised concerns about El Salvador’s step to legalize Bitcoin as a legal tender. The banker has expressed concern about the volatility of the cryptocurrency market and questioned whether Salvadorans are aware of the risks their government is taking. Bailey was speaking at the Cambridge University student union when he spoke about his views on the cryptocurrency market, which has become a matter of concern for several governments around the world due to its decentralized nature and its uncontrolled.
“I am concerned that a country will choose it as its national currency. What worries me most is, the citizens of El Salvador understand the nature and volatility of the currency they have? ” a report by the portal City AM quote Bailey as if speaking.
Bailey’s comments come as Britain is mulling over launching a national digital currency.
“There is a strong case for digital currencies, but in our view it should be stable, especially if it is used for payments. That’s not true crypto assets,” added the bank manager.
Currently, cryptocurrencies are not governed by any banks or financial intermediaries. Instant and untraceable cross-border transfers can easily be done using crypto tokens like Bitcoin and Ether. Several countries including India, South Korea, and the US are exploring ways to regulate the crypto space.
Earlier in November, the International Monetary Fund (IMF) also warned El Salvador against using Bitcoin as an official currency.
“Given Bitcoin’s high price volatility, its use as a legal tender presents significant risks to consumer protection, financial integrity, and financial stability. Its use also gives rise to contingent fiscal liabilities. Due to those risks, Bitcoin should not be used as a legal tender,” IMF speak.
While, Nayib BukeleThe President of El Salvador has been accelerating the adoption of Bitcoin in the Central American country.
Currently, El Salvador holds about 1,220 Bitcoin the tokens are worth around $70 million (approximately Rs. 524) at the time of writing. Bitcoin is being used as a legal tender alongside the US Dollar in El Salvador since September this year.
More than 200 Bitcoin ATMs have also been installed across the country.
Recently, Bukele revealed plans to build a “Bitcoin The city “at the foot of the Conchagua volcano, to power Bitcoin mining with renewable energy.
Meanwhile, other small countries like Tonga and Palau have seen discussions around legalizing Bitcoin as a legal tender so that the funds they receive from non-residents working abroad do not reduce service fees, which are deductible by remittance platforms.
