JPMorgan is the latest source to respond to El Salvador’s decision to adopt bitcoin (BTC) as a legal currency within the country.
in client note tweeted By @DocumentingBTC, the United States banking giant said that the adoption of BTC by El Salvador as a legal tender parallel to the US dollar has brought little economic benefit.
JP Morgan on adopting El Salvador #bitcoin
Pay attention to the last line… pic.twitter.com/5hl0kR9WB0
— Documenting Bitcoin (@DocumentingBTC) June 11, 2021
El Salvador’s parliament passed a historic bill on Thursday Recognize bitcoin as legal tender. The “Bitcoin Law” bill was passed with an overwhelming majority of 62 out of 84 votes.
Commenting on the move, a JPMorgan client note stated:
“With dollarization in the early 2000s, this move is not driven by sustainability concerns, but rather growth-oriented. […] But it is difficult to see any tangible economic benefits associated with the adoption of bitcoin as another form of legal tender, and it could jeopardize negotiations with the IMF.”
Facing a potential $3.2 billion budget deficit in 2021, El Salvador is reportedly in talks with the International Monetary Fund for a $1 billion funding program.
Given the IMF’s role in providing access to external debt for countries like El Salvador, JPMorgan’s comments echo similar sentiments supported by other market commentators as to the potential impacts of the BTC adoption move.
Indeed, the IMF itself has raised developmental issues by telling El Salvador to adopt bitcoin as legal tender. significant legal and financial implications.
Earlier on Friday, Benot Coure, Head of the Innovation Hub at the Bank for International Settlements, described El Salvador’s actions as “interesting experimentKure, a well-known bitcoin critic once called BTC The “Rogue Spawn” of the 2008 Global Financial Crisis.
Meanwhile, the Basel Committee on Banking Supervision on Thursday Bitcoin is classified in its highest risk category Advising banks to hold $1 of capital for every $1 worth of bitcoins held in custody.