Adopting Bitcoin, El Salvador Credit Rating Now Down

President Nayib Bukele, before the El Salvador army deployed to handle the demonstrations. (photo: twitter)

JAKARTA - The adoption of bitcoin in El Salvador as a legal tender has direct negative implications for the country. This was confirmed by credit rating S&P Global on Thursday, September 16.

S&P said the main risk was that it could threaten its hopes of securing support programs with the International Monetary Fund, increasing fiscal vulnerability and hurting banks by creating currency mismatches when they lend.

"The risks associated with the adoption of bitcoin as a legal tender in El Salvador appear to outweigh the potential benefits", S&P said. "There are immediate negative implications for credit".

S&P currently rates the central American nation a rating of B- with a 'stable' view. Moody's cut El Salvador's rating to Caa1, equivalent to one notch below B-, at the end of July. It also ranks on downgrade warnings.