- By Steve Smith
- December 23, 2021
El Salvador’s request denied by the world bank with bitcoin help as a legal tender. World bank has rejected El Salvador’s request to help with the implementation of Bitcoin as a valid digital currency.
The environmental impact of Bitcoin mining was mentioned earlier by Elon Musk when he denied the transaction of Bitcoin with Tesla. But now lenders cited the concerns that are causing a negative impact on the environment due to Bitcoin mining.
A country in Central America earlier announced plans to become the first nation to formally adopt digital currency.
They are intended to use Bitcoin as a legal tender along with US dollars.
The World Bank’s decision posed problems hitting them to ensure that Bitcoin is accepted nationwide in the next three months.
“We are committed to helping El Salvador in numerous ways including for currency transparency and regulatory processes,” said the World Bank spokesperson 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.
This was followed by El Salvador’s Finance Minister Alejandro Zelaya said on Wednesday that country had requested World Bank for technical assistance for Bitcoin help. They asked World Bank for assistance with the implementation of Bitcoin as a legal tender.
Mr. Zelaya ensured the success of meeting with the International Monetary Fund (IMF). In addition to this, he also said that IMF is not against the implementation of Bitcoin and ready for Bitcoin help.
But last week IMF said, with El Salvador’s Bitcoin adoption they observe “macroeconomic, financial and legal issues.”
Last week Congress accepted the proposal of President Nayib Bukele’ to embrace cryptocurrency. After that El Salvador officially classify bitcoin as a legal currency and became the first country to announce the use of Bitcoin as a legal tender.
President Bukele said that the government had taken a significant step and that step would help Salvodareans living abroad to send money home more conveniently.
The legislature will allow Bitcoin as a legal tender and it can be used as a valid currency alongside US dollars within 90 days of approval by Congress.
Earlier this month, President Nayib Bukele withdraw a corruption deal with the organization of the American States, which frightened the U.S. government, as Washington sought to vanish corruption in Central America as part of its immigration policy.
“The recognition of a ‘Bukele’ risk premium has probably done some permanent damage to investor sentiment,” Morden said in her client note.
Shamaila khan who is the head of EM debt strategies at AllianceBernstein in New York said that news headlines are maybe not considered for the market and not enough on the possibility of a deal with IMF.