Central Bank of Sri Lanka insists Bitcoin will not fix economic crisis Central Bank of Sri Lanka insists Bitcoin will not fix economic crisis
Sri Lanka rejected Tim Draper's proposal to introduce a Bitcoin-based economy and said it will not solve the country's issues.
2 min read
Updated: Aug. 3, 2023 at 2:51 am UTC
jdlasica / CC BY 2.0 / Openverse. Remixed by CryptoSlate
Tim Draper’s attempt to bring Bitcoin to Sri Lanka was firmly rejected by the country’s President Ranil Wickremesinghe, according to Bloomberg News.
Despite President Wickremesinghe declaring the country bankrupt in July 2022, the offer to integrate Bitcoin into the national economy was not taken up.
Sri Lanka is bankrupt
Around April 2022, protests erupted around Sri Lanka’s capital, Colombo, over a lack of food, medicine, and fuel.
The shortage of essentials had paralyzed the country, mainly concerning transport infrastructure, with buses, trains, and emergency medical vehicles unusable.
Sri Lanka could not pay its creditors, resulting in a default after failing to pay a $78 million repayment in May 2022. The government has since secured a $2.9 billion bailout from the International Monetary Fund (IMF). But the funds are subject to China and India agreeing to the restructuring deal.
In rebuilding the economy, President Wickremesinghe told local business leaders the country must focus on transforming into a “highly competitive export-oriented economy.”
“There is no other way out. We are a country with 22 million people. We have to find markets outside.”
Inflation for January came in at 54.2%, down from September 2022’s peak, when consumer prices were nudging just short of 70%.
It’s a no for Bitcoin
Draper was in Sri Lanka to film an episode of Meet the Drapers, a reality show where aspiring entrepreneurs pitch their ideas to members of the Draper family.
In between filming, Draper met with the President and Central Bank Governor Nandalal Weerasinghe on separate occasions to push Bitcoin adoption. Unfortunately, Draper’s efforts were unsuccessful.
Draper’s opening line, “I come to the Central Bank with decentralized currency,” was met with “we don’t accept” by Governor Weerasinghe.
Pressing further, it’s reported that Draper asked whether the administration had the “guts to do it?” To which Governor Weerasinghe fired back, saying other technologies are capable of distributing financial services. Further, he had concerns about monetary independence under a BTC standard.
“We don’t want to make the crisis worse by introducing Bitcoin.”
These comments echoed that of the previous Central Bank Governor Ajith Nivard Cabraal, who warned Sri Lankans that entities are not authorized to conduct cryptocurrency activities in the country.
The former Governor said only the rupee is approved for use by the Central Bank.
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Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
Tim Draper stands as a pivotal figure in the venture capital landscape, holding the position of founding partner at the esteemed firms Draper Associates and DFJ.