The Big Three Credit Agencies Critique El Salvador’s Bitcoin Adoption — S&P Global Warns of ‘Immediate Negative Implications’. El Salvador’s acceptance of bitcoin might have a detrimental impact on the country’s credit rating, according to the “Big Three” rating agencies. Following comments from Moody’s and Fitch Ratings on the situation in El Salvador, S&P Global stated that the acceptance of bitcoin has had “immediate negative consequences for its credit rating”.
S&P Global Joins Fitch Ratings, Moody’s Casting Criticism Down on Salvadoran Bitcoin Adoption
According to Fitch Ratings, El Salvador’s adoption of bitcoin (BTC) as a legal currency may expose the government to “regulatory and operating concerns,” according to Bitcoin.com News on August 17, 2021.
Furthermore, according to Fitch, the introduction of bitcoin would have a detrimental impact on the Latin American country’s insurance system. Fitch Ratings’ report came following a downgrade by Moody’s in June, when the ‘Big Three’ credit agency lowered the country’s rating to Caa1 from B3 and cited a “deterioration in the quality of policymaking”.
S&P Global appears to agree with Fitch and Moody’s, as reported by reuters.com on Friday. S&P Global sees “instant repercussions” when the government embraced bitcoin, according to the article (BTC). One of the most significant concerns, according to S&P, is receiving assistance from organizations. Such as the International Monetary Fund (IMF). Furthermore, S&P expects an “increase [in] fiscal vulnerabilities,” according to the study.
Risks appear to exceed potential benefits
S&P stated on Thursday that “the risks connected with the introduction of bitcoin as legal currency in El Salvador appear to exceed its potential benefits”. “It has direct negative consequences for [the] credit”. El Salvador now has a B- grade, which implies it is steady, according to Thomson Reuters’ Marc Jones.
The most recent remarks from S&P Global come in response to current events in El Salvador. On September 15, for example, demonstrators rushed to the streets and burned a bitcoin ATM on fire. In addition, the Salvadoran government is being probed for bitcoin ATM agreements and kiosk development. According to a complaint submitted by Cristosal, a human rights organization.