🚨 Time is Running Out: Reserve Your Spot in the Lucky Draw & Claim Rewards! START NOW
Learn to gain real rewards

Learn to gain real rewards

Collect Bits, boost your Degree and gain actual rewards!

New
Video Courses
Video Courses
Deprecated
Scale your career with online video courses. Dive into your learning adventure!

El Salvador Urged to Renounce Bitcoin as Legal Tender

El Salvador Urged to Renounce Bitcoin as Legal Tender

Members of the IMF’s executive board have warned about the potential risks of using Bitcoin as legal tender.

The International Monetary Fund (IMF) released a report of the 2021 Article IV Consultation with El Salvador, which concluded on January 24. In it, the Board of Directors urged El Salvador to reconsider its decision to declare Bitcoin as legal tender of the country.

The report states that while the use of digital means of payment, like the Chivo e-wallet, had the potential to move the financial inclusion in El Salvador further, the use of Bitcoin carried large risks tied directly to the cryptocurrency.

What is Curve Finance in Crypto? (Animated Explanation)

Did you know?

Want to get smarter & wealthier with crypto?

Subscribe - We publish new crypto explainer videos every week!

[The Directors] stressed that there are large risks associated with the use of Bitcoin on financial stability, financial integrity, and consumer protection <...> They urged the authorities to narrow the scope of the Bitcoin law by removing Bitcoin’s legal tender status. Some Directors also expressed concern over the risks associated with issuing Bitcoin-backed bonds.

Directors strongly recommended El Salvador to rescind Bitcoin as legal tender. According to fiscal data, “public debt is expected to rise to about 96 percent of GDP in 2026 on an unsustainable path.”

The official recommendation concluded the Article IV consultation between the IMF and El Salvador. As part of this consultation, experts visited the Central American country to evaluate its economic developments and hold discussions with government and central bank officials regarding financial policies.

The IMF has issued prior recommendations for small nations, including the Republic of the Marshall Islands, regarding the use of digital currencies. The executives emphasized that adopting a cryptocurrency could increase fiscal risks and affect macroeconomic stability.

The Bitcoin Law was adopted in El Salvador in September 2021, when the cryptocurrency was declared legal tender, despite warnings from the IMF. The global organization listed potential threats tied to this decision, including the destabilization of domestic prices and misuse of assets.

After the Article IV Consultation report was released, El Salvador President Nayib Bukele responded on his Twitter account with a meme.

Bukele approved the controversial Bitcoin Law despite facing public backlash. The Salvadoran President regularly tweets updates about the nation’s investments in BTC.

Among his most recent updates was El Salvador’s investment in a combined amount of 1801 BTC, which is valued at around $67 million at the time of writing.

Aaron S. , Editor-In-Chief
Having completed a Master’s degree in Economics, Politics, and Cultures of the East Asia region, Aaron has written scientific papers analyzing the differences between Western and Collective forms of capitalism in the post-World War II era.
With close to a decade of experience in the FinTech industry, Aaron understands all of the biggest issues and struggles that crypto enthusiasts face. He’s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.
Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain & Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.
Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.

Loading...
binance
×
Verified

$600 WELCOME BONUS

Earn Huge Exclusive Binance Learners Rewards
5.0 Rating