Central African Republic adopts bitcoin as formal currency

28 Apr 22

The Central African Republic has become the second country to make the cryptocurrency Bitcoin legal tender, following El Salvador’s move last year that faced criticism from global institutions.

A statement from president Faustin Archange’s office confirmed he had signed the bill into law, becoming the first African leader to do so.

“This move places the Central African Republic on the map of the world’s boldest and most visionary countries,” he said.

Bitcoin will now be used alongside the CFA franc.

El Salvador adopted Bitcoin as a legal currency in September, amid warnings from institutions such as the International Monetary Fund, which said the cryptocurrency’s volatility makes it unsuitable for official use.

In February this year the IMF again urged the Central American country’s government to drop bitcoin, saying its continued legal status “entails large risks for financial and market integrity, financial stability and consumer protection”.

Fund economists said financial inclusion, which the move was aimed at improving, is important, but programmes to facilitate digital payments could play this role without putting the financial system at risk.

The Salvadoran government, led by bitcoin evangelist president Nayib Bukele, has steadfastly refused to change course, and has begun issuing Bitcoin-backed bonds in the hope of building a ‘Bitcoin city’.

The IMF published a review of its ongoing programme aimed at making improvements to its public financial management and governance to help the government’s ability to access budget support from aid donors, but it made no mention of bitcoin or cryptocurrency.

It said economic activity was recovering amid an “improved but fragile” security situation and receding Covid-19 case numbers.

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