Its Constitutive Agreement establishes the procedures to contribute with sovereign governments. Holdings paid to the bank must be constantly revalued, following the rules of the agreement.

The World Bank denied technical assistance to El Salvador to adopt bitcoin (BTC), citing environmental concerns of digital mining and transparency. However, the multilateral entity could be forced to accept payments in bitcoin from nations that have adopted it as legal tender. This indication appears in its constitutional document.

The Articles of Agreement of the World Bank of 1944 establish the procedures and principles by which the World Bank undertakes to contribute with sovereign governments. Their commitment to accept payments from the Member States in local currencies appears as a highlight in the document.

The World Bank and what Methods it would apply to Deal with Volatility

Section 9 of the article states that holdings paid to the bank by members must be continually revalued (presumably against a relatively stable benchmark such as the US dollar). If the local currency has appreciated, he says, the World Bank should do what it is supposed to be the best and return the profits:

According to the Constitutive Agreement of the World Bank, each time the nominal value of a member’s currency significantly increases, the Bank will return to that member, within a reasonable time, an amount of that member’s currency equal to the increase in the value of that currency. Constitutive Agreement of the World Bank

World Bank is Injecting Capital Into fossil fuel plans

Forbes magazine recently stated in a report that the World Bank has already set investments of more than $ 12 billion in fossil fuel projects in the last six years,  which represents at least 6% of its total investment portfolio. It also receives gold payments from members, even though gold mines emit on average 0.8 tons of CO2 for every ounce of gold produced.

The publication also highlights that, despite this, the multilateral entity has expressed its concern about the carbon footprint that bitcoin is causing on a global scale. However, it seems unaware that according to some studies, 76% of bitcoin miners currently use renewable and clean energy.

The preservation of the natural environment was one of the reasons given by the World Bank for denying the technical help requested by El Salvador to adopt bitcoin as a legal tender. In a report released on June 17, 2021, a bank spokesperson made the following statement: “While the government of Nayib Bukele approached us for help on bitcoin, we stated that this is not something the World Bank can support, given the environmental and transparency deficiencies.”

The spokesperson also said that the agency shows a lot of commitment to helping El Salvador in some different ways, including through exchange transparency and regulatory processes, but not with the adoption of bitcoin as a legal tender.

By: Jenson Nuñez

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