In his recent lecture, Bank of England chief Andrew Bailey continues to criticize Bitcoin, calling the El Salvador experiment “concerning.”
During a speech to the Cambridge University students union on Thursday, Bailey expressed concern for the people of El Salvador following the country’s adoption of Bitcoin as legal tender.
Bailey called the decision to use Bitcoin as part of a dual currency system “concerning,” but added that volatility would be the most damaging factor.
Bailey isn’t the first person to warn about the “dangers” of bitcoin. Bailey stated in May that cryptocurrencies had no fundamental value and that investors should expect to lose their entire investment.
The Bitcoin experiment in El Salvador
El Salvador became the first country to accept Bitcoin as legal money on September 7.
The proposal has polarized views, with international legacy institutions such as the International Monetary Fund and World Bank expressing their opposition.
President Bukele, on the other hand, remains dedicated to the cause, claiming that it will result in more jobs, financial inclusion, and foreign investment.
El Salvador revealed plans to establish a Bitcoin City at the base of the Conchaga volcano in the country’s southern area earlier this week. The sale of “volcano bonds,” which would provide development cash to the Central American country, is linked to this.
Graham Stock, a senior sovereign analyst at Bluebay Asset Management, commented on the proposals, saying that obtaining funds through Bitcoin could deter El Salvador from developing long-term spending policies.
El Salvador’s Bitcoin experiment, Stock added, is “an unproven method,” and the country will almost certainly require IMF assistance in the future.
“Developing an economy based on cryptocurrency mining and luring crypto companies is, to put it nicely, an untested concept,” Stock said.
What did Bailey have to say?
Bailey said he was concerned about El Salvador’s Bitcoin experiment. Because of Bitcoin’s volatility, he is especially concerned for El Salvadorans.
“What worries me the most is if Salvadorans are aware of the currency’s origins and volatility,” Bailey remarked.
Bailey said there is a justification for digital currencies, but only in a stable currency environment.
Image courtesy of Cointelegraph News/YouTube