The World Bank Legal Instruments Appraisal and El Salvador’s Adoption of Bitcoin as Legal Tender

Abstract

In June 2021, the entire world woke up to the news that El Salvador, a country in Central America, adopted bitcoin as legal tender, alongside the United States Dollar. With the adoption of bitcoin, the country operates two currencies as legal tender. The World Bank affirms that it could not assist El Salvador's bitcoin implementation given the environmental and transparency drawbacks. The International Monetary Fund said it has economic and legal concerns regarding the move by El Salvador to make the bitcoin a parallel legal tender. The issue that arises from El Salvador’s decision is whether the World Bank has any justification for rejecting bitcoin as legal tender. In finding answers to this issue, this article examines the nature of cryptocurrency and bitcoin. It examines the nature and attributes of money as legal tender. It also examines the provisions of the International Bank for Reconstruction and Development (IBRD) Articles of Agreement 1944 (As amended effective June 27, 2012). The article concluded by identifying the ground upon which the World Bank can refuse to recognise El Salvador’s adoption of bitcoin.