World Bank declines to assist El Salvador with Bitcoin rollout

The World Bank (WB) said it cannot assist with the rollout of Bitcoin in El Salvador, citing cryptocurrency-related concerns over environmental impact and transparency, according to Reuters.

The organisation confirmed its readiness to provide assistance to the Central American country in various areas, including ensuring financial transparency and regulatory processes. Regarding the rollout of the digital currency, the WB noted:

“Although the government did indeed approach us for help with Bitcoin, this is not something the World Bank can support.”

Finance Minister Alejandro Zelaya confirmed that the country had turned to the World Bank for technical assistance after deciding to use cryptocurrency as a means of payment alongside the US dollar.

Zelaya also said that the МВФ “is not opposed” to Bitcoin adoption. Earlier, a representative of the IMF warned, that recognizing cryptocurrency as a legal tender raises “a number of macroeconomic, financial and legal questions.”

According to JPMorgan analysts, the authorities’ decision regarding Bitcoin could jeopardise relations with the Fund, on whom the country’s economy depends for support. The minister said that the latest round of negotiations with the IMF went well.

“There is no quick path to a resolution of the IMF programme and even uncertainty as to whether the Bitcoin proposal is compatible with diplomacy or multilateral relations with the United States,” said Shivon Morden, head of Latin America fixed-income strategy at Amherst Pierpont Securities.

Johns Hopkins University professor of applied economics Steve Hanke has warned that using Bitcoin as an official settlement currency could leave El Salvador without the dollar and derail its economy.

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