The World Bank has rejected a request from El Salvador for assistance with its Bitcoin adoption plans, reports Reuters.
The World Bank, an international financial institution that offers loans and grants to low-income countries, on Wednesday cited “environmental and transparency shortcomings” of Bitcoin as the reason for its turning down the request from El Salvador to provide it with technical assistance with its adoption of Bitcoin as legal tender.
El Salvador recently became the first country to adopt Bitcoin as legal tender when a supermajority of its senate voted to pass the bill submitted by President Nayib Bukele into law. The rejection from the World Bank could mean their plans for the implementation of the bill in the planned time frame could be impeded, though from all indications it would not stop them completely.
The finance minister of El Salvador, Alejandro Zelaya, recently revealed that they were making progress with their talks with the International Monetary Fund (IMF), though an IMF spokesperson told reporters last week: that adoption of bitcoin as legal tender raises a number of “macroeconomic, financial and legal issues that require very careful analysis.”
The country plans to roll out extensive programs to support the adoption of Bitcoin as a method of payment with the president saying adopting the cryptocurrency would bring “financial inclusion, investment, tourism, innovation, and economic development” to the country.
So far, the country has received criticism for its latest policy. A particularly vocal critic has stated that the move may be an attempt to de-dollarize the country by stealth and likely to be a disaster for the country saying “It’s also typical of Bitcoin fantasies; a project completely unsuited to daily life in El Salvador, set up largely to boost the image of the cryptocurrency itself.”
Despite criticisms, Bitcoin is set to bring economic growth to the country. El Salvador has a large population of citizens living in the USA and supporting their families back home. The adoption of Bitcoin, a decentralized payment solution, as legal tender, will bring financial inclusion to about 70% of its population that are currently unbanked and do not have the necessary documentation to open bank accounts, as well as ease remittance hurdles faced by its citizens in making cross border transactions via conventional banks.
Adoption of the currency is already being implemented in El Zonte, a small beach town popularly dubbed as Bitcoin Beach, where residents are using Bitcoin already for transactions among themselves. The country also has plans to pay salaries with cryptocurrency.