IMF Urges El Salvador to Eliminate Bitcoin as Legal Tender
DailyCoin
Published Jan 26, 2022 03:30AM ET
Updated Jan 26, 2022 04:00AM ET
IMF Urges El Salvador to Eliminate Bitcoin as Legal Tender
- The Fund had already warned that the adoption of the cryptocurrency “can bring significant risks” for the Salvadoran economy.
- President Nayib Bukele has not immediately reacted to this new demand from the IMF. But on Monday he said that this is the time to invest in BTC.
The International Monetary Fund (IMF) urged El Salvador on Tuesday to “eliminate the quality of legal tender” of Bitcoin while expressing its “concern” about the issuance of cryptocurrency-backed bonds that the country’s government plans to do Central American, reported EFE.
Through a statement, the international credit organization announced that the Executive Board had concluded the Article IV consultation with El Salvador on January 24. During the annual consultation, the strategy applied by the Nayib Bukele government to address the pandemic was analyzed, as well as the implementation of Bitcoin as a payment instrument.
President Bukele has made the adoption of BTC as a payment currency and the promotion of El Salvador as a cryptocurrency financial center in Latin America the main economic project of his government.
Personally, through his Twitter (NYSE:TWTR) account, the Central American leader promotes the purchase of Bitcoin and the projects that revolve around the cryptocurrency. Among them, Bitcoin City and the schools to teach about blockchain technology that it intends to finance by means of the controversial crypto bonds or volcano bonds.
The IMF has not been able to meet with Bukele
In early January, El Salvador’s Finance Minister, Alejandro Zelaya, announced that the government would send nearly 20 bills to Congress to create a regulatory framework to regulate the issuance of bitcoin bonds.
So far, Bukele has not responded to the IMF’s demand. In November, he rejected a report from the body warning of the underlying risks for the country due to the adoption of Bitcoin on November 7, 2021.
In this report, the Fund recommended that El Salvador “limit the scope of the Bitcoin Law” in the economy in order to avoid risks. Bukele not only ignored the agency’s recommendation, but also responded with a mocking tone.
The IMF asked Bukele for a meeting to discuss the issue of Bitcoin as legal tender and its risks, but so far it has not been possible.
"The adoption of bitcoin as a currency generates a series of macroeconomic, financial and legal issues that require very careful analysis," said Fund spokesman Gerry Rice, according to a review by El País. Last week Bukele was visiting Turkey where he was received and praised by President Recep Tayyip Erdogan. Both leaders signed six bilateral cooperation agreements in various sectors, including trade, economy, defense, education and diplomacy.
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During the meeting Bukele and Erdogan spoke about Bitcoin and cryptocurrencies. But what was discussed between the two presidents on this issue has not transpired. Turkey is currently going through a strong currency crisis as a result of the deterioration of the Turkish lira.
On the Flipside
- The IMF demand coincides with the collapse of BTC and the rest of the cryptocurrencies. So far this month, the world’s largest cryptocurrency by market cap has lost nearly half its value.
“Most people go in when the price is up, but the safest and most profitable moment to buy is when the price is down. It's not rocket science. So invest a piece of your McDonald's (NYSE:MCD) paycheck in Bitcoin. Now go back to flip more burgers you lazy fvçk!” he wrote. Although the IMF has already issued several warnings to the Salvadoran government about the risks associated with Bitcoin due to its high volatility, suggesting that effective measures should be taken to regulate the cryptocurrency, Bukele believes that his country is in a good place.
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