After the Central African Republic (CAR) announced adopting Bitcoin as legal tender and legalized the use of cryptocurrencies last month, the International Monetary Fund (IMF) warned that such a move might cause financial instability in the country.
The criticism came on the heels of the organization expressing hawkish opinions on multiple occasions against El Salvador’s adoption of Bitcoin and president Nayib Bukele’s ambitious plan to introduce Bitcoin-backed bonds.
The global authority stated that macroeconomic and legal uncertainties tagged along with the Bitcoin adoption are concerning. In an email replying to Bloomberg, the IMF noted:
“The adoption of Bitcoin as legal tender in C.A.R. raises major legal, transparency, and economic policy challenges. IMF staff are assisting the region and Central African Republic’s authorities in addressing the concerns posed by the new law.”
Criticism as such was not anything new from the IMF. Earlier this year, the fund called El Salvador’s move to accept Bitcoin as its currency “a large risk” to the market that could create “contingent liabilities.” Additionally, the IMF cited “price volatility” and a lack of use cases as the prominent issues of Bitcoin as a legal tender.
As the first African country to recognize Bitcoin as its currency, the CAR has faced backlash from the international community and its domestic oppositional forces. The government is accused of passing such a law without consulting opposition parties and the regional central bank responsible for managing the currency used by CAR and five other regional countries.
The authorities said that adopting Bitcoin as a legal tender will spur the country’s economic recovery and growth from the decade-long civil war.
As reported by CryptoPotato last month, the CAR’s existing currency is not currently recognized by the IMF. This makes international trade with the nation – and a dozen other African countries – exceedingly tricky and heavily dependent on France. The CAR is considered one of the world’s poorest countries by the United Nations, with only 11% of its population having access to the Internet.
Featured Image Courtesy of Al Arabiya
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