The Bank of England’s governor Andrew Bailey expressed reservations about El Salvador’s use of Bitcoin (BTC) as legal tender although, the bank of England promotes CBDCs as a “revolution of money.”
El Salvador’s plan to use Bitcoin as a currency, according to Bailey, is concerning since consumers are likely to be harmed by the cryptocurrency’s extraordinary volatility.
Bitcoin rocketed to a new record high above $68,000 on Nov. 9 after trading around $43,000 on the first day of El Salvador’s adoption of Bitcoin as legal cash. Since then, the price of BTC has plummeted, with Bitcoin currently trading at $54,626 at the time of writing.
According to Bloomberg, Bailey remarked at a Cambridge University student union address on Thursday, “It concerns me that a country might choose it as its official currency.”
The governor also questioned whether Salvadorans had any understanding of Bitcoin’s nature and volatility, which is his main concern.
Bailey also mentioned a fresh statement from the International Monetary Fund (IMF) on El Salvador, which is in charge of tracking threats to global financial systems.
The document, which was released on Monday, identifies “serious risks” associated with Bitcoin as a legal instrument and Bitcoin trading in El Salvador.
El Salvador’s Bitcoin Law was earlier warned by the IMF in June, but it didn’t stop the country from adopting it and accepting BTC as legal cash in September.
Bailey went on to say that the Bank of England is considering launching a central bank digital currency (CBDC), saying:
“There is a strong case for digital currencies, but in our view, it has to be stable, particularly if it’s being used for payments. That is not true for crypto assets.”
The announcement comes after Sir Jon Cunliffe, the Bank of England’s deputy governor for financial stability, described CBDCs as a “technology-driven revolution in the usefulness of money.”
In an August study by Redfield & Wilton Strategies, the majority of the British adult population was doubtful and apprehensive about a prospective CBDC adoption.
