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Bank of Spain Criticizes El Salvador’s Foray Into Bitcoin

bank of spain

The Bank of Spain was the central bank of Spain and criticised El Salvador’s adoption process when it declared Bitcoin legal tender. The Bank of Spain, the central bank of the country, has published a report entitled “The role crypto assets as legal tender: El Salvador’s example” and discusses the difficulties the country faced while using its bitcoin strategy. It also raises questions about the transparency of some actions taken.

Bank of Spain Examines El Salvador’s Bitcoin Bet

The Bank of Spain issued a report scrutinizing and reflecting upon the entrance of El Salvador into the Bitcoin world. Sergio Gorjon, General Directorate of Operations, Markets and Payment Systems, wrote the report titled “The role of cryptocurrency assets as legal tender. The example of El Salvador”. It stated that El Salvador, as any first-mover, made many mistakes in the implementation of Bitcoin.

The relative lack of transparency that the project has shown is one of the main concerns of the Bank of Spain. The report states

Another limiting factor was the indecisiveness and lack of consensus that the project was carried out. The major global rating agencies agreed that El Salvador’s sovereign credit rating would be lowered.

Other Issues Found

The Bank of Spain discovered other problems with El Salvador’s decision to move toward Bitcoin. The institution agreed with the opinion of Vitalik Buterin, co-founder of Ethereum, who stated that virtually forcing Bitcoin on an untrained, non-crypto-savvy population was risky. The Bank of Spain stated:

With just over 50% of its population with Internet access and a market share of smartphones that barely reaches 40%, El Salvador is at the bottom of the Central American countries in terms of the level of digital training.

The bank thanked El Salvador for taking steps to address concerns about bitcoin being used for terrorist financing or money laundering. According to the bank, the country’s regulation addresses these issues in detail and allows for stronger control measures.

What do you think about the Bank of Spain’s opinion on El Salvador? Please leave your comments below.

Image Credits: Shutterstock, Pixabay, Wiki Commons

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