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Steve Hanke: El Salvador's adoption of Bitcoin could cause its economy to collapse

An opinion that has raised a lot of criticism

As is known, the government of El Salvador has recently approved a provision declaring the legal tender of Bitcoin within the national territory, coupling it to the US dollar.
A decision which aroused no little surprise, as it creates a series of problems that are not easy to solve. As was pointed out by the International Monetary Fund, who also refused to provide support to the country in this regard.
Among the critical voices that have been raised, it should also be remembered that of Steve Hanke, professor of economics applied to the Johns Hopkins University. Let's see what he said about it and why his opinion should be taken into account.

Steve Hanke - Steve Hanke: El Salvador's adoption of Bitcoin could cause its economy to collapse

Who is Steve Hanke?

Steve Hanke has a very respectable track record. In addition to the post held at Johns Hopkins University, he is also part of the Cato Institute and acts as director of the Troubled Currencies Project. In his past he also boasts the position of senior economist during the Reagan administration, between 1981 and 1982.
A long-time critic of central banks, he firmly stated in 2018 that fewer of them should exist globally. According to him, no less than ten countries suffering from inflationary levels that are too high should proceed to adopt the dollar. Or alternatively, they should create a currency committee. In fact, in his opinion, those who did so could enjoy lower inflation rates, lower fiscal deficits, lower debt levels than gross domestic product, less frequent banking crises and higher real growth rates than before. countries comparable to them which have instead relied on central banks.

A well-known detractor of Bitcoin

As for Bitcoin, Hanke has never shown particular hesitation in opposing it. According to him, in fact, if digital money represents the future, BTC does not have similar prospects. As, according to him, its real value would be zero, or almost.
It is therefore easy to understand how with regard to his adoption in El Salvador, Hanke made no secret of considering him a very dangerous misstep. In his opinion, China or Russia, but not only, could use the small country of the Center America Salvador to collect and remove US dollars from the Salvadoran economy. Finally leading to the collapse of the economy, as within the country as much as 70% of people are excluded from the possibility of managing their assets with a simple bank account. Adding that if the Nigeria, where a similar proposal has been made, wants to do the same thing, it too risks collapse.

Prosper Mwedzi's answer

The sarcastic answers to Hanke came by return of post. And among them the one of Prosper Mwedzi, a Nigerian lawyer who deals with fintech in the African country. According to which Hanke has only one fixed idea, that of the currency committee. On which he continues to beat indefinitely, without realizing that today's world is increasingly complex. While for Mwedzi the adoption of a digital currency could allow Nigeria to improve access to financial services which are now closed to a large number of people. A real boulder which reflects on the economic future of the country, preventing it from taking off definitively.

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Dario Marchetti

I have a degree in Literature and Philosophy from the Sapienza University of Rome, with a thesis on the eastern border of Italy at the end of the First World War. I have collaborated with several sites on many issues and led the work group that published the official CD-Rom of the SS Lazio "History of a love" and "Photographic History of Magical Rome".

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