World Bank Reacts to El Salvador’s Bitcoin Leadership
For a relatively small nation with a population of just six million and a low per-capita income base, El Salvador having become the world’s first nation to make Bitcoin legal tender on a nationwide basis represents a remarkable leadership and is an example of forward-thinking savvy.
Just last month, El Salvador announced its adoption of Bitcoin as a formal currency, giving the 70% of its unbanked population access to a whole new world of financial services including the ability to buy products online, receive electronically-deposited salaries, use a whole range of electronic and internet-based applications for every day life exactly as in many of the world’s highly industrialized and wealthy nations.
It was, in short, a clever move that empowers the country’s population without any foreign aid reliance, and it angered former US President Donald Trump to the extent that his diatribe appeared on Fox News in which he ranted that the US Dollar will always be the world’s currency.
The move also led the way forward for other nations in the region to follow the same path. In Latin America, Bitcoin has been the subject of extreme interest ever since its invention eleven years ago as the populations of nations such as Argentina have regarded it as a route to freedom from government-imposed capital controls and inflationary fiat currencies and unreliable central banks.
Now, the World Bank has waded in, having stated today that it is going to refuse to assist the government of El Salvador with the implementation of Bitcoin as legal tender.
This is clearly a sign that the authorities, bound by monetary policy and reliant on sovereign fiat currencies issued by central banks, are concerned that they are being outrun by the peer-to-peer nature of cryptocurrency and the massive opportunities and empowerment that it offers its holders, miners and users.
Whilst the US Dollar remains the national currency of El Salvador alongside Bitcoin, it is fair to assume that Bitcoin will be in very widespread everyday use in the country as the 70% of El Salvador’s population that does not have a bank account will have to use Bitcoin in order to modernize their everyday lives.
Currently, they can only keep cash at home and use cash in local stores, but the ability for the majority of the country’s population to participate in an electronic, global economy of services, employment and consumerism represents a massive opportunity, and cannot be suppressed by any government.
El Salvador’s government approached the World Bank to ask for assistance in preparing the country’s fiscal framework for the rollout of Bitcoin which has a deadline for complete implementation of three months from now.
The World Bank having declined to assist has sparked concern that without such assistance, El Salvador may not meet the deadline and it could delay the rollout.
Perhaps it does not matter. El Salvador has already taken a global lead and marked itself out as the nation that was first in doing what many others would like to do and as a result will probably follow, therefore a few more months by going it alone would perhaps put El Salvador in an even stronger position as it will have done it all itself, and will be owing to nobody, and let’s face it, in the entrepreneurial, innovative and self-determining world of cryptocurrency, surely that is the best way.
“We are committed to helping El Salvador in numerous ways including for currency transparency and regulatory processes,” a World Bank spokesperson told the Reuters news agency via email.
“While the government did approach us for assistance on Bitcoin, this is not something the World Bank can support given the environmental and transparency shortcomings,” they added.
That is likely a politically correct means of saying that they do not want to assist any nation that breaks free from the shackles of the impoverishing grip of the World Bank and global governments which have interests in stifling the progress of national populations.
The International Monetary Fund (IMF) has maintained a neutral stance, saying that it had nothing against the adoption of Bitcoin by El Salvador, but that it does foresee macroeconomic, financial and legal issues. That is a very vague statement, however it is hard to see how giving purchasing power and borderless opportunities for earning a global income as well as the ability to participate in a modern range of electronic services is likely to do anything other than boost the nation’s economic progress.
El Salvador’s President Bukele quite rightly stated that his government has made history, and that the move would make it easier for Salvadoreans living abroad to send money home, an important matter because El Salvador currently relies on remittances for a large part of its economy, however with a newly empowered domestic population, this may well change, although Mr Bukele has remained modest about this massive opportunity so far.
Under the legislation Bitcoin will become legal tender, alongside the US dollar within 90 days of the approval by Congress.
The new law means every business must accept Bitcoin as legal tender for goods or services, unless it is unable to provide the technology needed to process the transaction.
You know that something disruptive and innovative is going well when it gets authority figures rattled.