JPMorgan Chase is the latest source of news in response to El Salvador’s decision to adopt Bitcoin (BTC) as domestic legal tender.
In customer notes Tweet Through @DocumentingBTC, the American banking giant stated that El Salvador has little economic interest in adopting BTC as a parallel legal tender for the US dollar.
JPMorgan Chase’s adoption of El Salvador #Bitcoin
Note the last line… pic.twitter.com/5hl0kR9WB0
— Documenting Bitcoin (@DocumentingBTC) June 11, 2021
On Thursday, the Salvadoran Parliament passed a historic bill Recognize Bitcoin as legal tenderThe “Bitcoin Act” bill was passed by an overwhelming majority of 62 out of 84 votes.
Commenting on the move, a customer report from JPMorgan Chase stated:
“Like the dollarization in the early 2000s, this move does not appear to be driven by stability concerns, but rather growth-oriented […] But it is difficult to see any real economic benefits to adopting Bitcoin as the second form of legal tender, and it may jeopardize negotiations with the International Monetary Fund. “
According to reports, El Salvador may face a budget deficit of US$3.2 billion in 2021, and it is reported that it is negotiating a US$1 billion financing plan with the International Monetary Fund.
Given the role of the International Monetary Fund in providing external credit channels for countries such as El Salvador, JPMorgan Chase’s comments echo similar views supported by other market commentators on the potential impact of the adoption of BTC initiatives.
In fact, the International Monetary Fund itself has raised questions, pointing out that El Salvador uses Bitcoin as a legal tender. Significant legal and financial consequences.
Earlier on Friday, Benoît Cœuré, head of the Innovation Center of the Bank for International Settlements, called El Salvador’s actions “Interesting experiment. Cœuré, a famous Bitcoin critic once referred to BTC as The “evil product” of the 2008 global financial crisis.
Meanwhile, on Thursday, the Basel Committee on Banking Supervision Put Bitcoin in the highest risk category It is recommended that banks hold 1 USD of capital for every 1 USD worth of Bitcoin held.
