S & P Global has revealed that El Salvador’s introduction of Bitcoin as legal tender had immediate negative effects that outweighed its potential benefits.
Notably, El Salvador’s recognition of Bitcoin has brought “immediate negative implications” on the country’s creditworthiness.
El Salvador’s move could also affect the country’s chances of securing a $1 billion loan agreement from the International Monetary Fund.
Other risks, according to S & P Global, include the fact that El Salvador’s Bitcoin adoption would increase fiscal vulnerabilities, and the fact that such a decision could hurt banks by creating currency mismatches in lending.
S & P Global stated: “The risks associated with the adoption of bitcoin as legal tender in El Salvador seem to outweigh its potential benefits.”
El Salvador’s President Nayib Bukele announced plans in June to adopt Bitcoin as legal tender. Prior to the announcement, the U.S. rating agency Fitch gave El Salvador a B- rating in April 2020, classifying the country as high risk with a negative outlook.
For more information, read the <a rel=”noopener” href=”https://www.reuters.com/article/el-salvador-bitcoin-ratings-s-p/el-salvadors-bitcoin-adoption-has-immediate-implications-for-rating-sp-global-idUSKBN2GC1Z7″ target=”_blank”>original story</a> in Reuters
For more information, read the original story in Reuters.