Bank of England Governor Fears Bitcoin Is Legal Tender in El Salvador – Regulation

The governor of the Bank of England, the country's central bank, has expressed concerns about El Salvador choosing Bitcoin as its national currency. Citing a recent warning from the International Monetary Fund (IMF) against the use of Bitcoin as legal tender, the governor said: “What would worry me most is that the citizens of El Salvador understand the nature and volatility of their currency.”

The Governor of the Bank of England is concerned about Bitcoin becoming legal tender in El Salvador

Bank of England (BOE) Governor Andrew Bailey raised concerns about the use of Bitcoin as legal tender in El Salvador while addressing the Cambridge University Students' Union on Thursday. Bailey explained:

It worries me that a country would choose it as their national currency... What would worry me most is that the citizens of El Salvador understand the nature and volatility of their currency.

El Salvador passed a Bitcoin law in September, making the cryptocurrency legal tender alongside the US dollar.

Governor Bailey added that the International Monetary Fund (IMF) is not happy what El Salvador has done BTC legal tender.

The IMF El Salvador said last week that Bitcoin “should not be used as legal tender.” Citing the “high price volatility of Bitcoin,” the fund explained that the use of BTC “as legal tender poses significant risks to consumer protection, financial integrity and financial stability.” In addition, “the use also gives rise to contingent tax liabilities.”

The IMF's warning came a day after El Salvador's President Nayib Bukele announced a plan to build the world's first "Bitcoin City" powered by a volcano and funded by Bitcoin bonds.

Despite the IMF warning, El Salvador Bought 100 more Bitcoins to take advantage of Friday's crypto sell-offs following reports of a new Covid-19 variant.

Governor Bailey also commented on the Bank of England’s work in deciding whether to issue its own central bank digital currency (CBDC). He emphasized:

Digital currencies speak for themselves, but from our perspective they need to be stable, especially when used for payments. This does not apply to crypto assets.

The Salvadoran president responded to the concerns of the Bank of England governor via Twitter on Saturday.

He wrote: "The Bank of England is 'concerned' about El Salvador adopting Bitcoin? Really? I think the Bank of England's interest in the well-being of our people is real. Right? I mean, they've always cared about our people. Always. Gotta love the Bank of England." Bukelefurther tweeted:

I'm really worried that the Bank of England is printing money out of thin air.

What do you think of Andrew Bailey's comments? Let us know in the comments section below.

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