El Salvador announced last week that it has approved the use of Bitcoin as one of the country's legal currencies. The Central American region was one of many countries that recently adopted the use of digital currency in terms of payment. However, the idea of it being a legal tender does not sound good for the World Bank.
World Bank Rejects El Salvador's Request to Make Bitcoin as Legal Tender
According to the updated report of Reuters on Thursday, June 17, the international lender said that it would not be able to help El Salvador in its mission to the Bitcoin implementation after citing its environmental impacts and transparency issues.
Last week, El Salvador President Naiyb Bukele said that the Salvadoran Congress has approved Bitcoin to be a legal currency in the country after garnering 62 out of 84 votes. The people saw this as a good opportunity for a financial revolution since there are no capital tax gains in using it.
While this was a remarkable announcement in the history of El Salvador, the hopes of the government to pursue bitcoin mining might be stuck in its stationary position as a cryptocurrency alone. When it asked for help from the World Bank to use Bitcoin as a parallel legal tender together with other foreign currencies like the US dollar, the request was denied shortly.
In an interview with Reuters via email, a spokesperson from the World Bank said that they are willing to assist El Salvador in their pursuit of the Bitcoin implementation. This also covers important procedures for the digital currency such as its regulatory and transparency processes.
However, the global financial body said that the request would be granted easily since the acceptance of the popular cryptocurrency in the region would mean another thing--its aftermath to the environment.
It was on Wednesday, June 16 when Alejandro Zelaya, the country's Finance Minister announced that they would be seeking assistance from the World Bank regarding making Bitcoin a legal tender.
In connection to the discussion, Zelaya clarified that the International Monetary Fund (IMF) approved the cryptocurrency implementation in the country. However, the IMF highlighted that El Salvador's acceptance of Bitcoin as a legal payment exposed the "financial, legal, and macroeconomic issues."
President Bukele Eyes Approval Because of Salvadoreans Living Abroad
Earlier this month, El Salvador noted that it is headstrong in accepting Bitcoin as a "legal coin." The move was supported by the government and they see this as an opportunity for those residents who work abroad and send money to their loved ones.
In the next three months, Bitcoin will be considered as a legal tender under the new legislation, BBC reported. Upon the implementation, people could now use it as a legit crypto payment when purchasing products or services.
Moreover, nearly 20% of El Salvador's gross domestic product (GDP) is reliant on the money coming from other countries. Each year, over two million Salvadoreans are reportedly living abroad. They send remittances of more than $4 billion.
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Written by Joseph Henry