Cryptocurrency News

Steve Hanke warns that BTC could ‘completely destroy the economy’ of El Salvador

Steve Hanke, Professor of Applied Economics at Johns Hopkins University, has warned that El Salvador’s recent adoption of bitcoin (BTC) as legal tender has the potential to “completely collapse the economy”.

Steve Hanke From 1981 to 1982 served as a senior economist under President Ronald Reagan’s administration. Hanke first described BTC as a speculative asset “with a fundamental value of zero” and the 78-year-old in April tweeted “Cryptocurrencies are the future of money. Bitcoin is not.”

Speaking with streaming financial news provider Kitco News on June 15, the university professor noted that BTC holders from regions such as Russia and China can now target El Salvador to capitalize on their holdings – essentially their US Dollar country ending:

“It has the potential to completely collapse the economy because all dollars in El Salvador could be empty and the country would have no money. They do not have a domestic currency.”

During the interview, the economist described elected representatives in El Salvador who voted in favor of President Nayib Bukele’s bitcoin legislation as “in a word, stupid” and questioned whether BTC is legal tender in day-to-day transactions. How can it function as The country where most of the citizens depend on cash.

“You’re Not Going To Pay For Your Taxi Ride With Bitcoin. It’s Ridiculous […] You don’t even have bank accounts with 70 percent of the people in El Salvador,” he said.

on June 11, JPMorgan echoed similar sentiments. But in more measured language, the firm said in a client note that it was difficult to see any “real economic benefits associated with the adoption of bitcoin as another form of legal tender, and that it could jeopardize negotiations with the IMF.” ”

The Central American Bank for Economic Integration (CABEI) however does not share this view and Having said that yesterday Adoption of BTC by El Salvador is innovative and “creates many spaces and opportunities.”

The multinational bank also revealed that it will be forming a technical advisory group to assist El Salvador in the transition to using bitcoin as legal tender.

Professor Hanke speculates that there are “clearly dark forces behind this” in El Salvador who want to use bitcoin to get their hands on the US dollar.

related: El Salvador reportedly weighs paying employees in bitcoin

The economist also told Remittances across borders in bitcoin As “idiots” because they believe it will need to be converted into dollars immediately in order to be able to use the asset.

“If Grandma in El Salvador is waiting for her remittance and you want to send bitcoins like that, that’s fine, but what does she do? She has to go to the ATM to get dollars because that’s the only way you can get something.” Can buy,” Hanke said. However, businesses in El Salvador will be mandated to accept bitcoin.

An article in Foreign Policy by Trenchant Bitcoin critic David Gerrard, author of the book 50 foot blockchain attack There has been speculation that El Salvador cannot print US dollars, so the adoption of BTC may be part of a move to source US dollar liquidity from its citizens. Paying back foreign debt.