Bank of England governor Andrew Bailey has expressed concerns over El Salvador’s adoption of Bitcoin () as legal tender after President of Bitcoin City.
Bailey argued that El Salvador’s decision to adopt Bitcoin as a currency was alarming because consumers are likely to suffer from the cryptocurrency’s extreme volatility.
Tradingon the first day of El Salvador’s Bitcoin adoption as legal tender, Bitcoin surged to a on Nov. 9. BTC price has significantly tumbled since then, with Bitcoin trading at at the time of writing.
“It concerns me that a country would choose it as its national currency,” Bailey said at the Cambridge University student union appearance, BloombergNov. 25.
The governor also questioned whether El Salvador citizens understand the nature and the volatility of Bitcoin at all, which causes his biggest concern.
Bailey also cited a newon El Salvador by the International Monetary Fund (IMF), which is responsible for tracking risks to global financial systems. Issued on Monday, the statement outlines “significant risks” arising from Bitcoin as a legal tender and Bitcoin trading in El Salvador.
The IMF previouslyin June, which didn’t prevent the country from adopting it and in September. Bailey added that the BoE is studying whether to launch a central bank digital currency (CBDC), stating:
“There is a strong case for digital currencies, but in our view, it has to be stable, particularly if it’s being used for payments. That is not true for crypto assets.”
The news comes shortly after BoE deputy governor for financial stabilitythat CBDCs are a “revolution in the functionality of money driven by technology.” On the other hand, the majority of the British adult population were in an August survey by Redfield & Wilton Strategies.