Credit rating agency Standard and Poor (S&P) Global believes the country of El Salvador has severely harmed its credit rating after enacting its Bitcoin Law recognizing Bitcoin (BTC) as legal tender nationwide on Sept. 7.<\/p>\n
According to a\u00a0report\u00a0from Reuters Thursday, El Salvador\u2019s Bitcoin embrace exposes its economy to significant financial risks and could pose challenges for the country\u2019s lending industry.<\/p>\n
The credit agency also believes the move could also dampen El Salvador\u2019s chances of securing a $1-billion loan agreement it is seeking from the International Monetary Fund (IMF).<\/p>\n
\u201cThe risks associated with the adoption of bitcoin as legal tender in El Salvador seem to outweigh its potential benefits,\u201d S&P said, emphasizing the \u201cimmediate negative implications\u201d of the Bitcoin Law for the country\u2019s credit rating.<\/p>\n
International credit rating agencies offer a grim outlook for El Salvador\u2019s ranking amid the lead-up to the BTC adoption.<\/p>\n
Prior to Salvadoran President Nayib Bukele announcing his intention for the country to recognize BTC as legal tender in June of this year, Fitch had stamped El Salvador with a B- in April 2020\u00a0\u2014 assessing the country as high risk with a negative outlook.<\/p>\n
S&P\u2019s last assessed El Salvador\u2019s credit score as being a B- as of Dec. 28, 2018, suggesting it may be due for an update, given the dramatic shift in the nation\u2019s monetary policy.<\/p>\n
While President Bukele\u00a0maintains\u00a0high approval ratings among the Salvadoran populace, his leadership and government have\u00a0faced backlash\u00a0for enacting the Bitcoin Law despite the country\u2019s\u00a0low rates of crypto literacy.<\/p>\n