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El Salvador’s bitcoin adoption has “immediate implications” for rating

by Mike Robinson

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© Reuters. FILE PHOTO – This illustration, taken on August 6, 2021, shows a representation of Bitcoin. REUTERS/Dado Ruvic/Illustration/File Photo/File Photo/File Photo/File Photo

By Marc Jones

LONDON (Reuters) – El Salvador’s adoption of bitcoin as legal tender has immediate negative implications for it credit rating S&P Global (NYSE:) said on Thursday.

S&P said the main risks were that it could threaten its hopes of securing a support programme with the International Monetary Fund, increase fiscal vulnerabilities and hurt banks by creating currency mismatches when they dish out loans.

“The risks associated with the adoption of bitcoin as legal tender in El Salvador seem to outweigh its potential benefits,” S&P said. “There are immediate negative implications for (the)

credit”.

S&P currently rates the central American country at B- with a ‘stable’ outlook. Moody’s cut El Salvador’s rating to Caa1 (NYSE:), which was one less than B-. The rating was also maintained on a downgrade notice.

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