The World Bank has said it will not participate in the development of El Salvador’s bitcoin project. The small Central American country turned to the World Bank asking for help in the implementation of Bitcoin as legal tender. The global financial institution aims to assist countries to “apply innovative knowledge and solutions to the challenges they face”. However, it has refused to work with El Salvador on adopting bitcoin citing the cryptocurrency’s environmental and transparency issues.
The World Bank Has Doubts Over El Salvador’s Bitcoin Project
The World Bank is still willing to help the country that became the first one to make Bitcoin legal tender. “We are committed to helping El Salvador in numerous ways for currency transparency and regulatory processes,” a n organisation’s spokesperson told Reuters. “While the government did approach us for assistance on Bitcoin, this is not something the World Bank can support given the environmental and transparency shortcomings,” he added.
It became clear later that day that the Salvadoran Finance Minister, Alejandro Zelaya, had approached the organisation. He had asked for technical assistance on introducing Bitcoin as legal tender to the country’s financial system.
IMF Also Concerned About El Salvador’s Bitcoin Legislation
The World Bank is not the first major financial institution that has frowned upon El Salvador’s legislation to accept Bitcoin as official currency. The International Monetary Fund is another large-scale institution that offers support to developing countries through grants, loans, technical assistance and policymaking. IMF said the adoption of Bitcoin as legal tender “raises a number of macroeconomic, financial, and legal issues.”
“Crypto assets can pose significant risks and effective regulatory measures are very important when dealing with them,” said IMF spokesperson Gerry Rice at a conference earlier in the month.
El Salvador’s president, Nayib Bukele, announced mid-June his country’s Congress has successfully passed a legislation that approves Bitcoin as legal tender. Three months after the legislation, Bitcoin must be accepted by every business in the country on par with the US dollar. The new Bitcoin law aims to improve financial transactions for the population. This applies both on own land and cross-border.