Bitcoin too volatile to be adopted as legal tender, says BoE chief

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Bank of England Governor Andrew Bailey has expressed concern over El Salvador’s acceptance of bitcoin (BTC) as a legal tender after President Najib Bukele announced the launch of Bitcoin City.

Bailey argued that El Salvador’s decision to accept Bitcoin as a currency is worrying because consumers are likely to suffer from the excessive volatility of the cryptocurrency.

On the first day of legalization of bitcoins in El Salvador, around $ 43,000 was sold, and on November 9, the price of bitcoin rose to a new record high, exceeding $ 68,000. at the time of writing.

90 day bitcoin price chart. Source: CoinGecko
“I am concerned that the country will choose it as its national currency,” Bailey said in a speech from the University of Cambridge Students’ Union, Bloomberg reported Thursday.

The governor also asked if Salvadorans understand the nature and instability of bitcoin, which is his biggest concern.

Bailey also quoted a new statement on El Salvador from the International Monetary Fund (IMF), which is responsible for tracking risks to global financial systems. A statement was issued Monday outlining the “significant risks” associated with the use of bitcoins as a legal tender and bitcoin trading in El Salvador.

The International Monetary Fund previously issued a warning against El Salvador’s bitcoin law in June, which did not stop the country from accepting and accepting BTC as a legal tender in September. Bailey added that the Bank of England is considering launching a digital central bank currency (CBDC), saying:

“Digital currencies have good reasons, but we believe they must be stable, especially if they are used for payments. This does not apply to cryptocurrencies. ”
RELATED: El Salvador’s Dollar Debt Deteriorates Bitcoin Bond Plans

The news came shortly after the Bank of England’s Deputy Chief Financial Officer, Sir John Cunliffe, declared the central bank’s digital currencies to be “a revolution in technology-based monetary functions”. On the other hand, most of the adult population in the UK were skeptical of the possible adoption of the CBDC, according to an August poll by Redfield & Wilton Strategies.

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