The International Monetary Fund has raised macroeconomic and legal concerns about the Central African Republic (CAR) adopting Bitcoin as legal tender. It said it cryptocurrency will raise a number of challenges for the country and the region.
An IMF spokesperson said the adoption of Bitcoin will bring a wave of legal, transparency, and economic policy challenges. As such, the financial institution is working with regional and CAR’s authorities to address the concerns posed by the new law.
The Central African Republic passed a resolution to accept Bitcoin as legal tender late last month. This made it only second to El Salvador, a Central American country, that became the first country in the world to legalize Bitcoin as legal tender in 2021. CAR government believes that Bitcoin will help the country’s struggling economy. It hopes Bitcoin will stabilize the country, which has been wracked by a decade-long civil war.
CAR is one of the poorest nations in the world and is the first African country to accept Bitcoin as legal tender. About 71% of CAR’s 5.4 million inhabitants, as per the World Bank, were living below the international poverty line in 2020. Obed Namiso, the chief of staff to President Faustin-Archange Touadera, described this as a decisive step toward opening up new opportunities for the country.
Economists have highlighted Bitcoin as a notorious digital asset because of its high volatility which raises questions about its role as a standard method of payment.