The International Monetary Fund (IMF) has voiced concerns over the Central African Republic’s adoption of bitcoin as legal tender saying it raises a number of challenges for the country and region.
The global authority expressed the same concerns that it did when El Salvador adopted bitcoin, namely macroeconomic and legal worries.
IMF officials assisting in addressing concerns
“The adoption of bitcoin as legal tender in the Central African Republic raises major legal, transparency, and economic policy challenges. IMF staff are assisting the regional and Central African Republic’s authorities in addressing the concerns posed by the new law,” an IMF spokesman told Bloomberg.
The National Assembly of the Central African Republic passed a resolution to accept bitcoin as legal tender last month, a move that took many observers by surprise, becoming the first country in Africa, and the second in the world, to recognize bitcoin as a currency.
Central African Republic believes bitcoin will aid growth
Like other countries and companies getting more involved with crypto, the Central African Republic believes that adopting bitcoin will help its struggling economy.
This may be the start of a new wave of countries accepting bitcoin as legal tender. Developing countries, in particular, stand to gain from the asset class, as it can help digitize economies and foster innovation, especially in countries with large unbanked populations heavily reliant on remittances.
El Salvador has accepted bitcoin as legal tender for some time, but there are still detractors and issues. Other initiatives like using volcanic energy to power mining, have also failed to live up to the hype.
Making bitcoin legal tender certainly helps adoption, but when it comes to the larger picture, matters get complicated. For instance, while bitcoin helped increase tourism revenue in El Salvador, the risks due to volatility, make it unpredictable. And this is what concerns the IMF the most.