BEAC, the Central Bank of Central Africa, criticizes in a letter the Central African Republic’s decision to make Bitcoin legal tender.
Summary
According to BEAC, the Central African Republic made a mistake with Bitcoin.
The controversy does not subside after the decision by the Central African Republic, which at the end of April decided to make Bitcoin legal tender in the country. This is one of the poorest countries in the world, ravaged by a harsh civil war for years. After the IMF, now also the BEAC harshly criticizes this choice.
A few days later, the International Monetary Fund called the African country’s decision very risky. On the other hand, in recent months the same body has repeatedly called on El Salvador to retrace its steps regarding the decision taken last September to adopt BTC as legal tender.
The Central African Republic does not have its own currency but uses the French franc (CFA), a currency that depends on the French Central Bank. In two years, 8 African countries (Benin, Burkina Faso, Ivory Coast, Guinea-Bissau, Mali, Niger, Senegal and Togo) have decided to abandon it after an agreement with France.
What the precedent of El Salvador has led to
Following El Salvador’s example, the president of the Central African Republic, Faustin-Archange Touadéra, decided in late April to sign a law granting Bitcoin legal tender status, commenting:
“This move places the Central African Republic on the map of the world’s boldest and most visionary countries”.
The law, as has already happened in El Salvador, has sparked a lot of controversy in the country. Some opposition parties have stated that they are working on an appeal to the Constitutional Court to have the text of the law revoked. It is certainly not considered a priority in a very poor country, despite the rich reserves of diamonds and gold in its territory.
BEAC’s concerns
BEAC, headquartered in Yaoundé, Cameroon, which governs the financial policy of Cameroon, Chad, Gabon, Equatorial Guinea, Central African Republic, Republic of Congo, has written a very harsh letter addressed to the government of the Central African Republic regarding the decision taken on Bitcoin.
In the letter addressed to CAR Finance Minister Hervé Ndoba, BEAC Governor Abbas Mahamat Tolli describes the significant negative consequences that the adoption of cryptocurrency in the country will have on the Central African financial association.
Extraordinary letter from the head of the French African colonial central bank (BEAC) to President Touadéra of 🇨🇫 saying that the new Bitcoin law will have a "significant negative impact" on the colonial franc system and urging Touadéra to reestablish "strict compliance" pic.twitter.com/Odlt4pjyZ6
— Alex Gladstein 🌋 ⚡ (@gladstein) May 8, 2022
BEAC’s concern about losing monetary control over the country is evident in the text of the letter:
“This law appears to have as its major goal the establishment of a Central African currency independent of the BEAC, which might compete with or displace the CEMAC’s legal currency and imperil monetary stability”.
The letter from the Governor of the Bank of Central Africa concludes with a clear and resolute appeal to “establish strict compliance” with the orders of the Central African Monetary Union.
