Bank of England Governor Andrew Bailey has raised concerns about the adoption of Bitcoin (BTC) in El Salvador as legal tender after President Nayib Bukele announced the launch of Bitcoin City.
Bailey argued that El Salvador’s decision to adopt Bitcoin as a currency was alarming because consumers are likely to suffer from the extreme volatility of the cryptocurrency.
Trading around $ 43,000 on the first day of Bitcoin’s adoption in El Salvador as legal tender, Bitcoin rose to a new all-time high above $ 68,000 on November 9. The price of BTC has dropped significantly since then, with Bitcoin trading at $ 54,626, as of press time.
“I am concerned that a country will choose it as its national currency,” Bailey said at the Cambridge University student union appearance, Bloomberg reported Thursday.
The governor also questioned whether Salvadorans understand the nature and volatility of Bitcoin, which causes their greatest concern.
Bailey also cited a new statement on El Salvador from the International Monetary Fund (IMF), which is responsible for tracking risks to global financial systems.. Issued on Monday, the statement describes the “significant risks” arising from Bitcoin as legal tender and Bitcoin trading in El Salvador.
The IMF previously issued a warning against El Salvador’s Bitcoin Law in June, which did not prevent the country from adopting it and accepting BTC as legal tender in September. Bailey added that the BoE is studying whether to launch a central bank digital currency (CBDC)., stating:
“There is a strong case for digital currencies, but in our opinion, it has to be stable, especially if it is being used for payments. That is not true for crypto assets. “
The news comes shortly after BoE Deputy Governor for Financial Stability Sir Jon Cunliffe declared that CBDCs are a “technology-driven revolution in money functionality.” On the other hand, the majority of the British adult population was skeptical and concerned about a possible adoption of CBDC in a survey conducted in August by Redfield & Wilton Strategies.
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