Bank of England Governor Andrew Bailey has raised concerns about the adoption of Bitcoin in El Salvador (BTC) 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.
Commerce about $ 43,000 On the first day of El Salvador's adoption of Bitcoin as legal tender, Bitcoin rose to a new all-time high above $ 68,000 On the 9th of november. The price of BTC has dropped significantly since then, with Bitcoin trading at $ 54,626 at the time of writing.
"I am concerned that a country will choose it as its national currency," Bailey said at the appearance of the Cambridge University student union, Bloomberg. reported Thursday.
The governor also questioned whether Salvadorans understand the nature and volatility of Bitcoin, which is causing their greatest concern.
Bailey also cited a new statement on El Salvador by the International Monetary Fund (IMF), which is responsible for tracking risks to global financial systems. Issued Monday, the statement outlines the "significant risks" arising from Bitcoin as legal tender and Bitcoin trading in El Salvador.
The IMF formerly issued a warning against El Salvador's Bitcoin Law in June, which did not prevent the country from adopting it and accept BTC as legal tender in September. Bailey added that the BoE is studying whether to launch a central bank digital currency (CBDC), stating:
โThere is a strong case for digital currencies, but in our opinion, it has to be stable, especially if it is used for payments. That is not true for crypto assets. "
Related: El Salvador's dollar debt sinks in Bitcoin bond plans
The news comes shortly after the BoE's deputy governor for financial stability. Sir Jon Cunliffe stated 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 an August survey by Redfield & Wilton Strategies.
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