Bank of Spain Dismisses El Salvador’s Bitcoin Experiment
The Bank of Spain, the country’s central bank, questioned El Salvador’s adoption procedure for making Bitcoin legal currency last month. The bank analyzes various pain points the nation experienced while implementing its bitcoin policy in a study titled “The function of crypto assets as legal tender: the case of El Salvador,” and expresses worry about how some measures were made with minimal openness.
The Bank of Spain published a study examining and commenting on El Salvador’s entry into the Bitcoin realm. According to the study, titled “The function of crypto assets as legal money: El Salvador’s example,” authored by Sergio Gorjón of the General Directorate of Operations, Markets, and Payment Systems, El Salvador made several errors in implementing Bitcoin as legal currency. One of the Bank of Spain’s primary concerns is the project’s relative lack of openness. According to the report:
The opacity and lack of consensus with which the project has been carried out has been another limiting factor. Thus, the main global rating agencies agreed to carry out a downward revision of El Salvador’s sovereign credit rating.
Additional Issues Discovered
The Bank of Spain discovered further issues with El Salvador’s march toward Bitcoin. The institution concurred with Vitalik Buterin, co-founder of Ethereum, who said that essentially imposing Bitcoin on an untrained, crypto-illiterate populace was dangerous. The Bank of Spain emphasized the following:
With little over 50% of its population having access to the Internet and a smartphone market share that barely exceeds 40%, El Salvador ranks last among Central American nations in terms of digital literacy.
However, the bank commended El Salvador for its efforts to address concerns about the use of bitcoin as a method of funding terrorism or money laundering. The bank said that the country’s legislation addresses these issues comprehensively and enables the strengthening of control mechanisms against these risks.