17.06.202102:05 Forex Analysis & Reviews: Steve Hanke: El Salvador's adoption of Bitcoin will lead the country to economic collapse

Exchange Rates 17.06.2021 analysis

Steve Hanke is confident that El Salvador's adoption of Bitcoin as a legitimate payment method can be a catalyst for the collapse of the country's economy.

It can be recalled that he has previously called BTC a speculative crypto asset with a zero base value. In April, the economist tweeted: "Altcoins are the future of money, but Bitcoin is not."

During the interview, he strongly criticized bitcoin: "You will not be able to pay for a trip on public transport with Bitcoin. The lion's share of Salvadorans does not have bank accounts."

The Doctor of Economics believes that the owners of Bitcoins in countries such as China have every chance now to focus their eyes on El Salvador to withdraw their own assets, completely withdrawing US dollars from the country's treasury. He noticed that this can lead to an absolute economic collapse, precisely because the entire circulation of the US dollar can go out of circulation and there will be no funds left in the country. Adding that the country does not have its own currency.

In his opinion, the adoption of cryptocurrency as a legitimate means of payment may jeopardize the country's relationship with the International Monetary Fund.

He also sees no reason to transfer Bitcoins from outside the country to their relatives since they will clearly have to convert them into US dollars, and this can be quite difficult, especially for the elderly.

Steve Hanke, Ph.D., Professor of Economics at the Johns Hopkins Institute, has become known as a currency reformer in emerging market countries such as Albania, Argentina, Bulgaria, Bosnia, and Herzegovina, Ecuador. He worked as an adviser to the heads of countries in Asia, South America, Europe, and the Middle East.

El Salvador cannot print US dollars, so its transition to Bitcoin may be a deliberate decision of the country's leadership in order to empty the pockets of the residents of the state for the payment of debts in US dollars.

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