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World Bank has decided not to help El Salvador with bitcoin implementation

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Shivangi Mujumdar Follow

INDIA

Jun, 18 2021

Jun, 18 2021

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The World Bank said, they could not assist El Salvador's bitcoin execution given for environmental and transparency drawbacks. The government can line up with us for assistance on bitcoin. The international lender cited worries over transparency and the environmental impact of Bitcoin mining. 

 

El Salvador's government did not instantly respond to a demand from Reuters regarding the World Bank's decision. Before Wednesday, Salvadoran Finance Minister Alejandro Zelaya said the Central American country had sought technical help from the Bank. 

 

Main pointers- 

 

  • * Previously this month, the Central American country declared plans to become the first nation to formally adopt digital currency.


  • * Its goal to use Bitcoin as a parallel legal tender together with the US dollar.


  • * The World Bank's decision could cruel the country faces difficulties in hitting its deadline to make sure that Bitcoin is recognized nationwide in the next three months.


  • * Zelaya specified on Wednesday the IMF was "not against" the bitcoin execution. 


  • * The IMF did not respond to an appeal for comment.


  • * Investors have newly demanded higher premiums to hold Salvadoran debt- on growing concerns over the completion of the IMF deal.

 

Why is it required? 

 

The international lender's refusal could hamper the government's aim of making the digital currency accepted through the country within three months. El Salvador's government last week became the first in the world to vote in favor of officially adopting bitcoin. It to apply along with the plans to use it for the U.S. dollar and the nation's official currency 

 

Finance Minister Alejandro Zelaya stated that the previous Wednesday that the government had asked the World Bank for "technical assistance" in applying the cryptocurrency, per the BBC. Zelaya stated government officials had also held talks with the International Monetary Fund, which he mentioned "not against" the plans. 

 

What were their words? 

 

A World Bank representative confirmed to Reuters that "the government did approach us for assistance on bitcoin," but stated it couldn't directly aid "given the environmental and transparency shortcomings" of bitcoin. 

 

An IMF spokesperson told journalists last week: "Adoption of bitcoin as legal tender raises several macroeconomic, legal and financial issues that require very careful analysis." 


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Shivangi Mujumdar

CBW - External Analyst

INDIA

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