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December 9, 2022
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Bitcoin

Bank of England worried about crypto project in El Salvador

The use of Bitcoin as the national currency raised concerns for the Bank of England governor.

Andrew Bailey, governor of the Bank of England (Bank of England, in free translation), expressed his fears regarding the legalization of Bitcoin as the official currency of El Salvador.

Nayib Bukele, President of El Salvador, recently announced the Bitcoin City project. The objective of the project, which has about $1 billion in digital investments, is aimed at focusing on technological education, geothermal energy for the entire city and a sustainable and efficient transport system.

On the other hand, Bailey believes that Bukele’s initiative is alarming, as users can suffer the harm caused by Bitcoin’s high volatility.

On the first day of “official” trading in El Salvador, Bitcoin was initially traded at US$43,000 per unit. The value would be well below the historical high registered by the asset, on November 9, when it reached US$ 68,000.

Bailey didn’t like it

Second information from Bloomberg, Bailey lamented Bukele’s decision:

“I worry that a country uses this as its national currency.”

In addition, Bailey also commented on a report issued by the International Monetary Fund (IMF), the entity responsible for verifying risks within global financial systems.

The report points out that there are “significant risks” to those who use Bitcoin in El Salvador. In June of this year, the IMF issued a document containing a warning about the risks that the country is taking through its laws.

Bailey said the Bank of England is studying the creation of a stable cryptocurrency, regulated by its central bank (CBDC, or Central Bank Digital Currency):

“In our view, it should be stable, particularly if used to make payments. This is not true of cryptocurrencies.”

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