The International Monetary Fund expressed concerns over the Central African Republic’s adoption of Bitcoin(BTC) as legal tender.
The IMF’s Africa head Abebe Aemro Selassie said for BTC to work as legal tender, the country must already have a ‘robust’ payment system in place, along with financial transparency.
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Selassie added that BTC should not be seen as a ‘panacea’ capable of solving a country’s economic problems.
Locals too have their doubts. An owner of a local timber firm expressed negative sentiment towards the move, saying:
“What can bitcoin bring to our country?”
The Central African Republic faces huge barriers to Bitcoin adoption, which raises the question of why officials voted in favor of the legal tender bill.
Second nation to adopt Bitcoin as legal tender
The National Assembly of the Central African Republic voted to pass the legal tender bill to improve the country’s economic prospects. Despite being rich in natural resources, the country counts as one of the world’s poorest nations.
Following the passing of the Bitcoin legal tender bill, Obed Namsio, the Chief of Staff to President Faustin-Archange Touadera, said it was:
“a decisive step toward opening up new opportunities for our country.”
Like El Salvador, the Central African Republic will operate a dual currency system with Bitcoin used alongside its existing fiat currency, the CFA franc.
Hurdles to adoption
Despite being mineral-rich, especially in high-value commodities including diamonds and gold, the African nation is one of the world’s least developed countries. USAID pins the problem on government instability due to decades of military coups and subsequent in-fighting between rebel groups.
Current circumstances mean 71% of the population of 5.4 million people lives below the international poverty line. This monetary threshold is determined to be just $1.90 a day and represents the baseline income required to sustain one adult.
The author of Attack of the 50 Foot Blockchain, David Gerard, points out that the Central African Republic’s internet coverage is low, at 11% of the country. In addition, World Data shows there are just 1.6 million mobile phones, which equates to less than 30% of the population having access to a phone.
With poor infrastructure, unreliable electricity supply, and widespread conflict, Bitcoin adoption seems like an unusual step for the CAR.
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