The World Bank refuses to assist El Salvador in adopting Bitcoin due to environmental and transparency concerns.

The World Bank stated on Wednesday that it will not assist El Salvador in adopting Bitcoin due to environmental and transparency concerns. Last week, the International Monetary Fund (IMF) also mentioned that El Salvador may face issues with its overall economy, finance, and compliance.

World Bank: Unable to Support El Salvador's Adoption of Bitcoin

The World Bank is a United Nations system international financial institution that provides loans for capital projects in developing countries.

The World Bank stated that while they have committed to assisting El Salvador in many aspects of currency transparency and regulatory processes, due to transparency and environmental reasons, the World Bank cannot respond to the country's request for help with Bitcoin-related matters.

As the World Bank can provide some low-interest or interest-free loans to developing countries, if the World Bank were willing to invest in El Salvador's Bitcoin fiat currency project, it could help the country's financial infrastructure.

Salvadoran President Fails to Secure IMF Support, Receives Consultation from Central American Development Bank

Salvadoran President Nayib Bukele had discussions with the IMF regarding Bitcoin-related projects. Although the IMF publicly stated that adopting Bitcoin as legal tender would pose macroeconomic, financial, and compliance issues, the country's finance minister also believes that the IMF does not "oppose" the matter.

Additionally, the Central American Bank for Economic Integration (CABEI) has set up a technical team to provide consultation to El Salvador.

Economists Warn: Could Lead to Economic Collapse

Johns Hopkins University economist and professor Steve Hanke stated that El Salvador adopting Bitcoin as legal tender would result in the country's U.S. dollar cash being quickly siphoned off by Bitcoin holders from other countries.

Furthermore, he believes that Bitcoin will not lower remittance costs, as the cash-out cost at ATMs is 8%, while the cost of using MoneyGram and Western Union for remittances ranges from 0 to 4%. However, he overlooks the fact that El Salvador has designated Bitcoin as legal tender and has payment processor Strike to facilitate cash-outs, allowing users to potentially engage in Bitcoin transactions directly without converting all of it back to cash.