El Salvador’s move is ominous

After El Salvador’s bold move last week to allow Bitcoin as legal tender, the country is now considering further action

Local radio station 107.7 Fuego GMV reported on Tuesday that Rolando Castro, the country’s Minister of Labor and Social Affairs, said that the government is holding talks examining the possibility of companies paying their employees with Bitcoin. Castro indicated that the Ministry of Labor is working with the Ministry of Finance and the Ministry of Economy to assess the feasibility of this option.

The decision to approve the use of Bitcoin as legal tender in the country came as a majority of members of Congress voted in favor of the law.  El Salvador’s president, Nayib Bukele, has been a proponent of Bitcoin since he announced his Bitcoin plan during a Bitcoin conference in Miami earlier this month. After the release of Bitcoin, President Bukele instructed the state-owned geothermal electricity company to provide certain facilities for mining bitcoin with cheap and clean energy.

He also detailed the country’s plan to use volcanoes to generate green energy for this venture. The South American country’s decision to accept crypto did not go down well with everyone.  Criticism, prompted by skepticism about Bitcoin and other cryptocurrencies, has led several institutions, especially the global financial institutions, to question the country’s move. Last week, the International Monetary Fund warned that it sees legal and economic concerns in El Salvador’s decision.

Economic experts have also questioned El Salvador’s move. Professor of applied economics Steve Hanks has faulted the move, claiming that accepting BTC is a disaster for the country. Speaking to Kitco News, the Johns Hopkins University professor noted that the country, which has long used the dollar as its main currency, has embarked on a path towards economic collapse.

He warned that owners who want to cash out their bitcoin would target the South American country, and therefore explained his belief that the country was in danger of running out of dollars. Hanks claimed that the decision was forced by criminal companies. He warned other countries, including Paraguay and Panama, not to bow to pressure to legalize Bitcoin.

However, not every establishment opposed El Salvador’s move. Institutions such as the Central American Bank for Economic Integration (ZABI) have supported El Salvador’s move. The international bank recently stated that it would provide technical support for the transition in El Salvador.

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