World Bank refuses to help El Salvador integrate bitcoin
Because of concerns allegedly of an environmental nature, the World Bank refuses to help El Salvador with Bitcoin. But its own constitution actually commands the institution to accept – and hold – Bitcoins now. However Bitcoin can not be stopped, there are even crypto debit cards on the market now – find out more on this website.
El Salvador, the smallest country in Central America, recently made Bitcoin legal tender. To overcome the numerous technical challenges that come with it, the government has asked for help from the World Bank, among others.
What the specific nature of the request is is not known. According to Reuters, El Salvador asked for “technical assistance,” which the World Bank should actually be willing to provide. After all, according to Wikipedia, its core mission is to “promote the economic development of less developed member countries through financial assistance, advice, as well as technical assistance, thereby contributing to the implementation of international development goals.”
Loans and credits are a key instrument for this, to support projects on favorable terms. One could speculate, not entirely without irony, that El Salvador, for example, wanted a loan to build up the announced $150 million Bitcoin fund.
The World Bank is not willing to play along
It is helping El Salvador in a variety of ways, such as creating transparency in payments or regulatory processes, a spokesperson for the institution explained. But “given the shortcomings in terms of the environment and transparency,” the World Bank could not help the country with Bitcoin integration.
However, resourceful observers, such as those in Forbes, have noted that the World Bank actually has an obligation under its own bylaws to accept Bitcoins from now on. In its constitution, adopted in 1944, one finds the procedures and processes by which the World Bank interacts with governments. These include the obligation to accept payments in local currencies.
Article V, Section 12, writes: “The Bank must accept payments from each member in the form of the member’s currency made to the Bank, either under Article II, Section 7 (i), or to amortize loans …” In addition to countries’ official currencies, the World Bank must also accept debt backed by a government’s reserves. So, as the Forbes article bills, the institution would have to accept not only Bitcoins, which are an official currency in El Salvador, but also promissory bills backed by the $150 million fund that the National Development Bank wants to build in Bitcoins.
And it goes further, as read in Forbes: the World Bank, according to Article II, Section 9, has to monitor the value of national currencies in dollars. If this “declines to a significant extent,” the country must transfer to the Bank “within a reasonable period of time, more units of its currency to maintain the value that was originally agreed upon.” Conversely, if the value increases, the World Bank returns the currency units to the country in question.
In other words, and in the words of the author of the Forbes article, “When the bitcoin price falls, the World Bank starts accumulating coins. Nice.”
But will the World Bank accept this? It does not seem to be a friend of Bitcoin. Otherwise, they would not rebuff El Salvador’s request for support with such light hearted arguments. After all, just the way Bitcoins are created is a great opportunity for a country like El Salvador, which has abundant geothermal sources, to develop renewable energy; and the high transparency of Bitcoin payments, as even a former CIA director has recognized, can be a perfect tool to fight crime.
The International Monetary Fund (visit website) seems to be somewhat more favorably disposed. El Salvador’s finance minister said that ongoing negotiations with the IMF are successful – meaning they will not be disrupted by the Bitcoin law – and that the institution is not opposed to Bitcoin integration. However, an IMF spokesman also said they see “macroeconomic, financial and legal problems.” He added that they would monitor the process closely, analyze it carefully, and continue to advise the government. That doesn’t sound quite as open as hoped, but also not quite as dismissive as feared.