The World Bank has declined El Salvador’s request for technical assistance in the nation’s ambition to adopt bitcoin as a legal tender due to, you guessed it, environmental and transparency concerns.
World Bank Declines El Salvador’s Request For Technical Assistance
The World Bank, which is an international financial institution that gives loans, grants, and technical assistance to struggling countries, said it will not be assisting El Salvador integrate bitcoin into its national economy.
The bank highlighted bitcoin’s growing energy problem and transparency as the key reasons why it will not be providing any technical assistance to El Salvador.
“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.”
Nonetheless, the World Bank is willing to assist El Salvador in a myriad ways such as “currency transparency and regulatory processes”, according to a report by Reuters on June 16. Earlier on Wednesday, El Salvador finance minister Alejandro Zeleya had announced that the Central American country had asked the World Bank for technical help with integrating bitcoin as legal tender alongside the U.S. dollar.
El Salvador grabbed the headlines this month after becoming the first nation in the world to make bitcoin a legal tender. President Nayib Bukele proposed a bill that was eventually passed on June 9 by a supermajority in the country’s congress.
Bukele’s plan was made possible by a partnership with bitcoin payments firm Strike. He has since laid out plans to use 100% renewable energy from El Salvador’s volcanoes to mine the bellwether cryptocurrency.
Doubt Over El Salvador’s Bold Bitcoin Plan
Notably, bitcoin enthusiasts were not entirely shocked with the World Bank’s decision. Morgan Creek’s Anthony Pompliano, for instance, said: “The World Bank hasn’t figured out how to make money off Bitcoin.”
To the surprise of absolutely no one, El Salvador has faced some pushback ever since approving bitcoin as a legal tender. Besides the World Bank, the International Monetary Fund (IMF) has also poured cold water on El Salvador’s monumental bitcoin bet. In particular, the IMF argued that accepting bitcoin as legal tender poses “a number of macroeconomic, financial and legal issues that require very careful analysis”. El Salvador is currently in talks with the IMF to secure $1billion in financing by 2023.
Additionally, Steve Hanke, professor of applied economics at John Hopkins University, recently warned that El Salvador’s acceptance of bitcoin as legal tender could very easily cause its economy to collapse.
President Bukele intends to make the bitcoin legal tender dream a reality within 90 days. But with the World Bank now refusing to help, it remains to be seen whether the country will be able to pull it off within the stipulated time.