Claver-Carone believes that adopting Bitcoin as legal tender will not help boost the Salvadoran economy. The IDB president said that it is necessary to study the Bitcoin Law in depth before implementing it.
In recent days, the president of the Inter-American Development Bank (IDB) Mauricio Claver-Carone spoke about the adoption of Bitcoin (BTC) in El Salvador. He believes that its use as legal tender will not help boost the economy due to the volatility in its price.
According to the Salvadoran newspaper El Mundo, Claver-Carone joins the negative remarks concerning the Bitcoin Law. Multilateral organizations such as the World Bank and the International Monetary Fund are also against it.
The executive said that the Salvadoran government seeks to facilitate transactions and commerce transparently and securely, but Bitcoin is not the solution.
After that statement, Claver-Carone softened his position, saying that the Executive of El Salvador has good intentions. The IDB president stressed the need to study this law deeply and highlighted the advantages of blockchain technology.
Concerning the use of Bitcoin in the Central American country, the highest representative of the international financial organization considers that Bitcoin is a speculative resource. For El Salvador, whose comparative advantage is the stability that dollarization provides, it is complicated and would add unnecessary volatility to that system.
Using Bitcoin for Sending and Receiving Remittances
The Legislative Assembly of El Salvador expeditiously approved the Bitcoin Law on June 8th. For its approval, 62 of the 84 deputies voted in favor of the regulation.
The document says that natural or legal, public or private, persons can use Bitcoin in any transaction that they need to conduct. Not only individuals and companies will be entitled to use Bitcoin as legal tender, but also the organs of public administration. This law also establishes that every economic agent must accept Bitcoin as a form of payment when acquires a good or service from them.
President Nayib Bukele seeks to use Bitcoin to send and receive remittances at a lower cost per transaction.
Between May 2020 and May 2021, the amount of money that came from remittances with Bitcoin quadrupled. The amount went from around USD 424,000 last year to more than USD 1.7 million this year.
International Organizations Call for Caution on El Salvador’s Bitcoinization
The IDB and the World Bank call for caution on the bitcoinization of the Salvadoran economy while the IMF expressed its concerns. The World Bank did not agree to give El Salvador technical assistance regarding its adoption of Bitcoin as legal tender. The international agency considers that it cannot support the implementation of the cryptocurrency in the economy of the Central American country. They argue that the use of the crypto asset is harmful to the environment and lacks transparency.
Meanwhile, International Monetary Fund (IMF) spokesman Gerry Rice also gave his opinion on this issue. He said that the adoption of Bitcoin as legal tender involves a series of macroeconomic, financial and legal problems.
By Alexander Salazar
