Bitcoin’s excessive volatility, according to the IMF, poses major threats to consumers, financial integrity, and financial stability.
The use of Bitcoin as legal tender “also generates fiscal contingent liabilities,” according to the IMF.
Statement of IMF’s 2021 Article IV Mission
The international financial institution suggested “narrowing the scope of the Bitcoin law” and “strengthening the regulation and supervision of the new payment ecosystem,” which analyses the fiscal, monetary, and external positions of its member nations on a yearly basis.
El Salvador President Nayib Bukele’s declaration of a $1 billion “bitcoin-bond” over the weekend was not mentioned in the IMF’s negotiations with the administration, according to the IMF.
However, the government’s intentions would “require a very careful analysis of implications for, and potential risks to, financial stability,” according to the Article IV concluding statement.
Mockingly President Bukele put a satirical Tweet on IMF and thrashes the firm with facts and figures.
Crypto investor Lark Davis also mocked IMF by saying, “IMF is just obsessed with El Salvador”. He highlights the fact that El Salvador has escaped from the grip of global elite bankers.
El SALVADOR IS MAKING FIRST “BITCOIN CITY”
El Salvador approved bitcoin as its second form of legal money, alongside the US dollar, in September.
Since 2001, when the country dropped its old national currency, the colón, after two decades of double-digit inflation, the dollar has been the country’s main form of money.
El Salvador became the first government in the world to adopt bitcoin, or any cryptocurrency, as a form of legal cash, generating both enthusiasm and criticism from the crypto community.
Unless there is a technical barrier, economic agents are legally compelled to take bitcoin as a form of payment for services now that it is a form of legal cash.
El Salvador’s government has unveiled Chivo, e-wallet backed by a $150 million government trust fund that accepts both US currency and bitcoin transactions, as well as conversions between the two.
El Salvador will construct the world’s first “bitcoin city” at the base of the Conchagua volcano, with bitcoin mining supported by geothermal energy and no taxes except VAT, according to President Bukele.
IMF RECOMMENDS STRONG REGULATIONS IN THE NEW PAYMENT SYSTEM
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