The International Monetary Fund (IMF) is telling El Salvador to forget about bitcoin for good and to forgo any further plans involving the world’s number one digital currency by market cap. The financial giant is saying that bitcoin is too volatile and risky to be used as legal tender, and it is asking the Central American nation to revert to the old ways of using the U.S. dollar.
The IMF Wants El Salvador to Get Rid of BTC
El Salvador made history last year when it announced plans to make bitcoin legal tender. People could walk into any store or business and pay for services or items with bitcoin the way they could with USD, which was the fiat currency the country had long been dependent on. The goal was to make things easier for people and try to wean the nation of off foreign assets.
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Many agencies throughout the world scowled at this idea, including the World Bank. The agency stated that it was not going to be helping El Salvador in any way when it came to implementing its bitcoin agenda given that the asset was too vulnerable to price swings, and thus using it as a legal currency was likely going to backfire in some way.
Now, it looks like the IMF is joining the ranks of the World Bank and warning El Salvador that continuing its present path can only lead to trouble and despair. In a report, the monetary firm explained that using bitcoin creates an environment of heavy risk. It also said that using bitcoin calls into question the nation’s “market integrity, financial stability, and consumer protection.” The document concluded by stating:
It also can create contingent liabilities.
The IMF is also asking that strict regulatory tactics be put in place to monitor the country’s El Chivo wallet system, which is storing all the bitcoin being used by the nation’s residents.
The Currency Has Fallen
One of the reasons that El Salvador has been taking a lot of flak for using bitcoin as of late is because the crypto market has seemingly dropped tenfold in a rather short period. The entire space lost as much as $130 billion in just the last few days alone, and several leading assets are now experiencing heavy price drops including bitcoin, which briefly fell below $33,000 earlier in the week. However, at the time of writing, the currency is trading for just shy of $38,000, suggesting the currency is now on a path to recovery.
It is unclear if El Salvador is going to listen to the criticisms offered by the IMF, though given a recent foul-mouthed response issued by its president Nayib Bukele on Twitter, one can argue that the country is likely going to continue its present crypto agenda without delay.