The use of bitcoin as a legal means of payment could completely destroy the economy of El Salvador. This was stated by Johns Hopkins University professor of applied economics Steve Hanke in an interview with Kitco.
Residents of the country will not use cryptocurrency for everyday transactions, but the government’s decision will allow foreign owners of bitcoin to convert the asset into dollars, which is the official currency, the former chief economist in the Reagan administration believes.
“This could lead to a complete collapse of the economy, because all the dollars from El Salvador can be sucked out like a vacuum cleaner, and there will be no money left in the country. They have no national currency, ”Hanke said.
Most of the country’s citizens rely on cash, therefore, according to the economist, it is doubtful that cryptocurrency will become widespread as a means of payment.
The professor considers transfers in bitcoin from abroad pointless, since they will have to be expensively converted into American currency.
Hanke called the lawmakers who supported President Naiyib Bukele’s proposal “stupid” and suggested that the decision was backed by “dark forces” in the country who want to use bitcoin to get dollars.
Earlier, JPMorgan analysts doubted that the recognition by El Salvador of the first cryptocurrency as a legal means of payment would bring tangible economic benefits to the country. At the same time, the bank’s specialists noted that such a decision could jeopardize negotiations with IMF.
The representative of the international institution itself has already indicated that the use of cryptocurrency can entail a number of risks and regulatory problems.
The experts interviewed came to the conclusion that the adoption of the cryptocurrency can equally as an inflow of investments into the country and the withdrawal of capital.
The Central American Bank for Economic Integration (CABEI) said it will support El Salvador in the adoption of bitcoin and will create a technical group for this.
Earlier, President Bukele instructed the state energy company to organize platforms for mining cryptocurrency using the geothermal energy of volcanoes.
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