JPMorgan is the current source to react to El Salvador’s choice to embrace Bitcoin (BTC) as legal currency within the nation.
In a customer note tweeted by @DocumentingBTC, the United States banking giant mentioned that there was little financial advantage to El Salvador embracing BTC as a parallel legal tender to the U.S. dollar.
JP Morgan on El Salvador embracing #Bitcoin
Notice the last line… pic.twitter.com/5hl0kR9WB0
— Documenting Bitcoin (@DocumentingBTC) June 11, 2021
On Thursday, El Salvador’s parliament passed a historical expense to acknowledge Bitcoin as legal tender. The “Bitcoin Law” expense gone by a frustrating bulk of 62 out of 84 votes.
Commenting on the relocation, the JPMorgan customer note mentioned:
“As with the dollarization in the early-2000s, this move does not seem motivated by stability concerns, but rather is growth-oriented […] But it is difficult to see any tangible economic benefits associated with adopting Bitcoin as a second form of legal tender, and it may imperil negotiations with the IMF.”
Facing a possible $3.2 billion deficit spending in 2021, El Salvador is supposedly in talks with the International Monetary Fund for a $1 billion financing program.
Given the IMF’s function in offering access to external credit for countries like El Salvador, JPMorgan’s remarks echo comparable beliefs upheld by other market analysts regarding the possible ramifications of the BTC adoption relocation.
Indeed, the IMF itself has actually raised concerns the advancement by specifying that El Salvador embracing Bitcoin as legal tender positions considerable legal and monetary implications.
Related: IMF prepares to consult with El Salvador’s president, possibly going over transfer to embrace Bitcoin
Earlier on Friday, Benoît Cœuré, the head of the development center at the Bank for International Settlements called El Salvador’s actions an “interesting experiment.” Cœuré, a kept in mind Bitcoin critic when called BTC the “evil spawn” of the 2008 worldwide monetary crisis.
Meanwhile, on Thursday, the Basel Committee on Banking Supervision categorized Bitcoin in its greatest danger classification recommending banks to hold $1 capital for each $1 worth of Bitcoin held in custody.