International Monetary Fund urges El Salvador to give up Bitcoin

Tram Ho

The IMF leaders “underscored the great risk to the financial system, integrity, user protection, and other financial liabilities when using Bitcoin.”

During the meeting between the two sides, the IMF urged the El Salvador government to narrow the scope of Bitcoin, by removing the digital currency’s legal status. In September 2021, the Central American country became the first country in the world to recognize Bitcoin as a legal currency, parallel to the USD.

Quỹ tiền tệ quốc tế kêu gọi El Salvador từ bỏ Bitcoin - Ảnh 1.

Salvadoran President Nayib Bukele has staked his political career on experimenting with Bitcoin in the country. In recent months, the country has added hundreds of Bitcoins to its balance sheet. On January 21, President Bukele announced on Twitter that he had spent another 15 million USD “bottom-fishing” when the digital currency plummeted. Bitcoin is now down 50% from its all-time high in November 2021.

The IMF expressed concern about the risks associated with the issuance of Bitcoin-backed bonds, President Salvador’s plan to raise $1 billion through a partnership with Blockstream, a digital infrastructure company. digital.

Part of the plan to bring Bitcoin nationwide includes the launch of the Chivo digital wallet, which charges no transaction fees and enables fast cross-border payments. In a country where more than 70% of the population cannot access traditional financial services, Chivo was built to create a more convenient experience for those who have never been in the banking system.

The IMF agreed that the Chivo e-wallet could facilitate digital payments, but also stressed the need for “strict regulation and supervision.” Many Salvadorans have reported identity theft, when hackers used their identification card numbers to open e-wallet accounts in order to obtain $30 worth of Bitcoins that the government “gifted” to each account. new.

The IMF has voiced concerns about Salvador’s Bitcoin experiment for months now. Tuesday’s statement (January 25), echoes a report released by the IMF last November, which expressed concern that the digital currency’s high volatility could lead to significant risks. tell users and Bitcoin should not be used as an official currency.

Disagreements over digital currency policy will make it even more difficult for the Central American country to secure a $1.3 billion loan agreement from the IMF.

The International Monetary Fund forecasts that, with current policies, El Salvador’s public debt will increase to 96% of GDP by 2026, putting the country on an “unsustainable path”.

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Source : Genk