Johns Hopkins University applied economics professor Steve Hanke believes that the adoption of bitcoin as a legal tender in El Salvador will destroy the country’s economy.
Hanke worked as a senior economist during the administration of former US President Ronald Reagan from 1981 to 1982. The professor has previously called Bitcoin a speculative asset with zero value, although he did not have such a negative attitude towards other cryptocurrencies. So, in April Hanke statedthat bitcoin could be displaced from the cryptocurrency arena by more promising digital currencies.
“Cryptocurrencies are the future of money, which cannot be said about bitcoin,” he wrote on Twitter.
Hanke considered the recent decision of the El Salvadorian government to legalize bitcoin as a tool for payments and settlements inappropriate.
“Bitcoin could lead to a complete collapse and depletion of the economy of El Salvador. All dollar resources will be siphoned out of the country, and given that El Salvador does not have a state currency, there simply will be no money left there, ”Hanke said.
The professor even suggested that dark forces are behind the legalization of bitcoin, who want to use cryptocurrency to get hold of US dollars. He expressed bewilderment as to how bitcoin would be used in everyday transactions, if 70% of the country’s citizens use cash and do not even have bank accounts.
The economist is convinced that cross-border transfers in bitcoins do not make sense, since the crypto asset will need to be instantly converted into dollars in order to start using the money.
“If some grandmother in El Salvador is waiting for a money order and you send her bitcoin, what should she do next? She has to go to an ATM and exchange cryptocurrency for dollars, because this is the only way to buy something, ”Hanke said.
The American bank JPMorgan also saw no tangible economic benefit associated with the adoption of bitcoin in El Salvador. At the same time, the Central American Bank for Economic Integration (CABEI) does not share this point of view and believes that the transition of El Salvador to bitcoin provides many opportunities and creates conditions for the development of innovation.
However, the representative of the International Monetary Fund (IMF) Gerry Rice (Gerry Rice) said that the legalization of bitcoin raises various economic and legal issues.
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