The International Monetary Fund has stated that the adoption of Bitcoin as legal tender by the Central African Republic presents a number of challenges.
Ranking among the poorest nations in the world, the nation last week became the second to adopt cryptocurrency after El Salvador. The Central African Republic is the first African nation to accept bitcoin as legal tender.
Opposition parties criticized the government’s decision, which was made without consulting the regional central bank that manages the shared currency of six countries, including the Central African Republic.
“Bitcoin’s acceptance as legal tender in C.A.R. raises significant legal, economic policy, and transparency issues,” the Fund said in an emailed response to a question sent to it.
In response to concerns raised by the new law, IMF staff are assisting the Central African Republic’s authorities.
What you should know
- Cryptocurrencies like Bitcoin have been criticized for being used to launder money by criminals and causing environmental damage because they consume a heavy amount of electricity.
- According to WorldData, in 2019, only 4% of people in CAR had access to the internet.
- CFA franc, along with most other former French colonies in Africa, is currently the currency of the country
- The Central African Republic’s government said the adoption of Bitcoin will spur the economy’s recovery and growth as well as help stabilize the country, which has been ravaged by a decade-long civil war.
- With an economy of $2.3 billion, the African Development Bank forecasts it will grow by 5.1% this year. It ranks 188 out of 189 in the UNDP’s Human Development Index. Just 557,000 of the 4.8 million people in the nation have access to the Internet, and there is a low life expectancy and poverty.