JPMorgan is the latest source to respond to El Salvador’s decision to adopt bitcoin (BTC) as the country’s legal currency.
In the client’s note tweeted @DocumentingBTC, the US banking giant, said there was little economic benefit to El Salvador, which accepted the BTC as a legal tender against the US dollar.
JP Morgan on the adoption of El Salvador #Bitcoin
Notice the last line … pic.twitter.com/5hl0kR9WB0
– Bitcoin Documentation (@DocumentingBTC) June 11, 2021
The Salvadoran parliament approved a historic bill on Thursday recognize bitcoin as legal tender. The “bitcoin” bill was approved by an overwhelming majority of 62 out of 84 votes.
In the comment on the move, JPMorgan’s client’s note stated:
“As with the dollarisation in the early 1920s, this move does not appear to be motivated by stability concerns, but rather to growth […] However, it is difficult to see any tangible economic benefits associated with adopting bitcoins as a second form of legal tender, and this may jeopardize negotiations with the IMF. “
Faced with a potential budget deficit of $ 3.2 billion in 2021, Salvador is reportedly negotiating a $ 1 billion financing program with the International Monetary Fund.
Given the role of the IMF in providing access to external credit for nations such as El Salvador, JPMorgan’s comments reflect similar sentiments to other market commentators regarding the potential consequences of the BTC adoption process.
In fact, the IMF itself has caused development problems by stating that El Salvador accepts bitcoins as legal tender. significant legal and financial implications.
Earlier on Friday, Benoît Cœuré, head of the Innovation Center at the Bank for International Settlements, called Salvador’s events “interesting experiment. “Cœuré, a well-known critic of bitcoins, once called BTC The “evil” global financial crisis of 2008.
Meanwhile, on Thursday, the Basel Committee on Banking Supervision put bitcoins in the highest risk category advising banks to hold $ 1 in capital for each $ 1 bitcoin in custody.