El Salvador’s application for help in adopting bitcoin as a currency was turned down by the World Bank, according to a spokeswoman for the Washington-based development lender.
El Salvador’s legal currency remains the US dollar, but the country’s legislature adopted a bill on June 9 that would enable the unstable digital currency to be used for all purchases beginning in September, making it the first country to do it.
“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,” the World Bank official said to AFP by email.
“We are committed to helping El Salvador in numerous ways including for currency transparency and regulatory processes.”
El Salvador’s Finance Minister, Alejandro Zelaya, stated on Wednesday that President Nayib Bukele has asked the World Bank for technical assistance in implementing and regulating the virtual currency.
However, he emphasized that bitcoin is not being used to replace the US currency. Concerns regarding the usage of digital currencies have also been raised by the IMF.
“Adoption of bitcoin as legal tender raises a number of macroeconomic, financial and legal issues that require very careful analysis,” IMF spokesperson Gerry Rice told journalists in the previous week after El Salvador’s move, stressing that digital currency carries serious dangers.
The government is in discussions with the IMF for more financial assistance, and Zelaya hailed recent conversations as “successful,” saying that IMF executives were not against the usage of bitcoin but needed to see how it would affect the economy.
Bukele has pushed for the shift as a method to boost the economy and provide more citizens in El Salvador exposure to banking.