Sri Lanka’s Central Bank Says Bitcoin Can’t Solve Economic Crisis

Billionaire investor Tim Draper got a more challenging reception than he expected when he proposed Sri Lanka, a bankrupt nation, to Bitcoin.

Draper was in Sri Lanka on Tuesday talking to local entrepreneurs about cryptocurrency adoption. The founder met the country’s President Ranil Wickremesinghe that day regarding the matter.

Draper went to the country’s central bank to present the same pitch. However, Governor Nandalal Weerasinghe, still working to fix the nation’s economic challenges, did not embrace the idea. The central bank governor responded that Bitcoin adoption in Sri Lanka would not be a 100% reality.

Weerasinghe said that introduction of Bitcoin would worsen the crisis; therefore they still decide to take that path. The government official stated that other technologies can be effectively used in financial services to promote social inclusion and quickly disburse funds to those in need.

Financial crises driving nations to Bitcoin

Draper described Sri Lanka as a corrupt nation during the meeting and fronted cryptocurrency as a solution. He argued that Sri Lanka, a country known for its mineral resources, could have addressed its corruption by keeping perfect records through Bitcoin adoption.

Last year, Sri Lanka faced one of the worst economic crises ever in its history, driving up prices and causing shortages of food and fuel supplies across the country. As a result, such difficulties were touched protesting which forced President Gotabaya Rajapaksa to flee the country and later announced his resignation.

Sri Lanka is currently in conversations with a group of private creditors from Japan, China and India to restructure their debt in line with the IMF’s plan. The country is restructuring its debt payments of about $51 billion of the $28 billion that must be repaid by 2027.

According to Draper, Sri Lanka can tackle the financial crisis through Bitcoin adoption. The billionaire investor sees the cryptocurrency as a good store of value, not subject to changes in government or central bank policy.

In the meeting, Draper cited El Salvador. This nation adopted Bitcoin as a legal tender after the government embraced crypto to increase financial inclusion and economic development.

Countries like Zimbabwe, Turkey and Venezuela are also witnesses ongoing financial crises. They suffer from hyperinflation and as a result their citizens have increasingly turned to cryptocurrency as a medium of exchange and store of value.

According to Draper, Bitcoin is one of the essential tools for humanity to overcome economic crises. He believes investors should continue to seek opportunities by investing directly in Bitcoin and its underlying technology (Blockchain).

Bitcoin price action

Today, Bitcoin is trading at $23,633 with a trading volume of $30.7 billion. Bitcoin has been down 0.93% in the last 24 hours. The cryptocurrency’s price rose by 3.22% in the last seven days.

Bitcoin’s value plummeted in November following the fall of the FTX exchange, a fall that saw the cryptocurrency trade below $17,000 for several weeks. The cryptocurrency has so far recovered its value from November’s crash, boosted by institutional adoption.

Despite the ongoing brief rally, the cryptocurrency has lost over 70% of its value since its all-time high of over $69,000 recorded in November 2021. Tim Draper remains bullish, he mean the flagship cryptocurrency will reach $250,000 this year.

Featured image from Shutterstock, chart from TradingView