The International Monetary Fund (IMF) has expressed concern over the increasing adoption of cryptocurrencies, particularly Bitcoin, in African countries in recent times.
Last week, the Central African Republic (CAR) President Faustin-Archange Touadra signed a new law to make Bitcoin legal tender in the country. As a result, the legislation makes CAR the first African country to adopt cryptocurrency, specifically Bitcoin, as legal tender.
According to officials, the adoption will drive CAR forward, and also put it on the map of the world’s boldest and most visionary countries.
CAR’s Bitcoin adoption came a few months after El Salvador became the first country in the world to accept Bitcoin as legal tender in September 2021, which makes CAR the second country in the world to accept cryptocurrencies as legal tender.
The country’s recent adoption of Crypto has been condemned by many, most notably by the International Monetary Fund, as the organization believe introducing a cryptocurrency as legal tender will pose many legal and transparent economic policy challenges for the Central African Republic.
Abebe Selassie, director of the IMF’s Africa department, criticized the move during a press briefing at the organization’s economic outlook for sub-Saharan Africa on Thursday, stating, “it’s really important not to see such things as a panacea for economic challenges our countries face.”
He also stressed the importance of having a solid legal basis before taking such a step, according to him, “You have to make sure that, you know, the legislative framework in terms of the transparency of financial flows, the governance framework around it is all robustly in place.”
To avert these risks, IMF officials are currently assisting CAR in addressing the risks stemming from CAR’s recent adoption of bitcoin as legal tender.
Also, since January 2021, the International Money Fund has been trying to get El Salvador to withdraw its status as legal tender for bitcoin, urging El Salvador’s officials on the “large risks associated with the use of Bitcoin on financial stability, financial integrity, and consumer protection, as well as the associated fiscal contingent liabilities.” Still, the country stood its ground on Bitcoin adoption to date.