The Central African Republic’s adoption of Bitcoin as legal tender presents a series of challenges for the country and the region, the International Monetary Fund said.
This was disclosed by the International Monetary Fund via mail to Bloomberg.
The central African Republic is the second country after El Salvador to embrace bitcoin as legal tender overtaking regions with high cryptocurrency adoption such as Nigeria to become the first in Africa to officially adopt bitcoin as legal tender.
What you need to know
The Central African Republic, a country with about 79% of its 4.7million populous living in poverty, announced that it would accept bitcoin as a legal tender.
The CAR parliament unanimously passed a law in favor of the adoption of bitcoin, driven by the need to solve currency and exchange rate challenges.
The move puts CAR “on the map of the world’s boldest and most visionary countries”, it said.
IMF’s position on the Bitcoin adoption
The decision was taken without consulting the regional central bank, which maintains a common currency used by six countries, including the Central African Republic, and sparked criticism from opposition groups.
“The adoption of Bitcoin as legal tender in C.A.R. raises major legal, transparency, and economic policy challenges,” the fund said in an emailed response to questions. “IMF staff are assisting the region and Central African Republic’s authorities in addressing the concerns posed by the new law.”
The $2.3 billion economies, which is expected to grow 5.1 percent this year according to the African Development Bank, is ranked 188th out of 189 countries on the United Nations Development Programme’s Human Development Index.
Only 557,000 of the 4.8 million people in the country have access to the Internet, resulting in a short life expectancy and extreme poverty.