Johns Hopkins University professor of applied economics Steve Hanke recently criticized the introduction of Bitcoin in El Salvador. Hanke thinks it is not a good idea for the Latin American country to use Bitcoin as legal tender and says it could “completely collapse the economy”.
Steve Hanke wants countries to adopt currency boards instead of focusing on introducing Bitcoin
American economist Steve Hanke knows a lot about currencies as he is a Senior Fellow of the Cato Institute and Director of the Troubled Currencies Project. Hanke was also a senior economist during the Reagan administration from 1981 to 1982. The economist is critical of central banks and stated in 2018 that the world could use less of them. At the time, Hanke highlighted ten countries suffering from hyperinflation and the economist suggested that the countries either adopt the US dollar or create a currency board.
“Countries that have used currency boards have lower inflation rates, lower budget deficits, lower debt levels in relation to gross domestic product, fewer banking crises and higher real growth rates than comparable countries that have employed central banks,” said Hanke at the time.
Fast forward to three years later, Hanke is now discussing Bitcoin (BTC) and the effects of widespread adoption. Hanke is not a fan of Bitcoin and has mentioned this fact on numerous occasions. Last April, Hanke tweeted: “Bitcoin cops hate discussing Bitcoin’s shortcomings. Cryptocurrencies are the future of money. It’s not Bitcoin. ”The economist also shared an article he wrote emphasizing the use of currency boards over Bitcoin.
By doing items, Hanke talks about monetary luminary Milton Friedman, and Hanke also said he believes Bitcoin has a “fundamental value of zero”. Hanke attacks Bitcoin again after finding out that El Salvador would use Bitcoin as legal tender in the Latin American country. Hanke thinks nations like China or Russia could use El Salvador to pay off and remove the USD from the equation.
“It has the potential to completely collapse the economy because all the dollars in El Salvador could be sucked up and there would be no money in the country. You have no local currency. You won’t pay for your taxi ride with a bitcoin. It is ridiculous […] 70% of the people in El Salvador do not even have a bank account, Hanke emphasized during one interview with Kitco’s David Lin. Hanke continued:
The big problem with cryptos in general is that you can’t convert them into real legal tender that can be used cheaply and quickly. For example, you can’t exchange Bitcoin for US dollars cheaply and easily.
Nigeria shouldn’t follow in El Salvador’s footsteps, says Hanke
According to the economists’ testimony with Kitco’s David Lin, Hanke also shared an article on Twitter written by Bitcoin.com News writer Terence Zimwara. The article explains how the Central Bank of Nigeria (CBN) is discussing the country that will adopt a digital currency by the end of the year. Hanke didn’t like the CBN’s assessment, saying that if it were like El Salvador’s idea it would likely lead to ruin. Hanke tweeted:
If Nigeria’s digital currency plans are similar to El Salvador’s Bitcoin plan, it will FAIL. Instead of playing with crazy ideas, Nigeria needs to set up a USD currency board, as it did between 1913 and 1959.
Zimbabwean fintech lawyer and crypto advocate Prosper Mwedzi responded to Hanke’s testimony on Nigeria and said: “I think a digital currency for Nigeria could improve access to financial services, depending on [the] Design. “Additionally, several others disagreed with Hanke’s comment and responded to his scathing Nigeria / Bitcoin tweet.
“Hanke only has a hammer (USD currency board), so everything looks like a nail to him,” another person said wrote. “Bitcoin has no such restrictions and will continue to save weak economies,” the person added.
What do you think of Steve Hanke’s comment on El Salvador and Nigeria? Let us know what you think on this matter in the comments below.
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