The World Bank will not help El Salvador with its implementation of Bitcoin as legal tender.
“We are committed to helping El Salvador in numerous ways including for currency transparency and regulatory processes,” a spokesperson from the World Bank is quoted saying, according to a Reuters report. The comments come as the Middle American country reportedly reached out to the institution to ask for support. “While the government did approach us for assistance on bitcoin, this is not something the World Bank can support given the environmental and transparency shortcomings,” the spokesperson said.
The World Bank is an international financial institution that provides loans to low- and middle-income countries. As its mission, it states the pursuit of “sustainable solutions that reduce poverty and build shared prosperity in developing countries.”
The argument of Bitcoin’s climate impact, while highly disputed, is a persistent one that has gained steam in recent months. Yet the World Bank itself has come under fire from critics bringing up its own environmental shortcomings.
In October last year, German environmental lobby group Urgewald released research that found the World Bank had invested over $12 billion in fossil fuels since the Paris Agreement, despite its commitment to help developing countries reach the Agreement’s climate goals. The investments went into direct fossil fuel financing, technical assistance to push fossil fuel projects, as well as the support and expansion of existing fossil fuel operations, with Urgewald stating that “the WBG has at least $12.1 billion of public assistance working to make 38 countries more dependent on fossil fuels.”
After calls for a clearer stance on fossil fuels from within the EU, the World Bank amended its climate policy — yet it didn’t make any promises of halting fossil fuel financing.
El Salvador is currently in the process of expanding the infrastructure needed to ensure the new Bitcoin law can be implemented on a national scale. This includes the development of a government-owned wallet, which will allow merchants to convert bitcoin to dollars if they prefer not to hold bitcoin, as well as improvements to the local mobile and internet infrastructure. If and how the World Bank’s refusal to assist the country’s efforts will affect its progress is unclear.
While the World Bank has rejected El Salvador’s approach, negotiations with the International Monetary Fund (IMF) appear to be going better, as Salvadoran Finance Minister Alejandro Zelaya apparently said on Wednesday that the IMF was “not against” El Salvador’s Bitcoin move.