Moody's Downgraded El Salvador

Moody's downgraded El Salvador, which made Bitcoin official. The country's credit rating is Caa1.

International credit rating agency Moody's downgraded El Salvador's rating and maintained its negative outlook on the country's economy. In a press release released yesterday, Moody's also said the government should pass the law that makes Bitcoin official money, regarding why the rating was downgraded. El Salvador's long-term foreign currency credit rating was downgraded from B3 to Caa1. While B3 is a highly speculative note, Caa1 means that the country's economy has significant risks. Both of these ratings fall far behind investment grade levels. In addition, Moody's stated that there is a deterioration in the quality of policy making, that the Bitcoin law and other measures reflect the weakened administration in El Salvador, that these measures escalate tensions with international partners, including the United States, and jeopardize the agreement with the IMF. The Bitcoin law, passed by the parliament in El Salvador, will come into effect as of September 7, and businesses in the country will have to accept Bitcoin in addition to the US dollar from this date. While the law passed with the approval of 62 of the 84 votes in the parliament, anti-Bitcoin actions were also taken by some groups in the country.