El Salvador should not adopt bitcoin as its official currency given the risks associated with this cryptocurrency: this was stated on Monday by the International Monetary Fund in a document.
The IMF’s publication comes the day after Salvadoran President Nayib Bukele announced his desire to build a “Bitcoin City“, a new city powered by volcano energy and funded by a cryptocurrency bond. The IMF also highlighted the Salvadoran government’s efforts to develop financial inclusion and economic growth through the use of digital technologies. But it warns at the same time about the use of Bitcoin as an official currency, due to the high volatility that – again according to the IMF – would generate significant risks for consumer protection, for the integrity of the financial system and for financial stability.
Bukele on Twitter described the IMF’s release as an “interesting” analysis of the country of him: “Even if we obviously disagree on some things, such as the adoption of Bitcoin, the analysis made on our country is interesting” he noted.
The IMF also added that Bitcoin should not be adopted as an official currency also because its use can also have budgetary consequences, and invited the Salvadoran authorities to limit the scope of the legislation dating back to 7 September that made the cryptocurrency an official currency of the country on a par with the US dollar (which replaced the national currency twenty years ago). The international body also asked that the Chivo Wallet digital wallet, controlled by the Salvadoran authorities, protect all user funds, in dollars and bitcoins, through the separation and protection of reserve assets.
In a bitcoin conference in Latin America, President Bukele explained on Saturday that the Bitcoin City “will include everything: residential neighborhoods, merchants, services, museums, entertainment venues, airports, ports, trains”. And that the Conchagua volcano “will provide the energy needed for the entire city and will also fuel mining”.
El Salvador was also dissuaded from using Bitcoin as legal tender by a senior US State Department official, who suggested to the president that whatever El Salvador chooses to do, it must be ensured that it is well regulated. , transparent and responsible.
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El Salvador had recently been dissuaded from using Bitcoin as legal tender, including by a senior US State Department official, who suggested to the president that whatever El Salvador chooses to do, he must ensure that it is. well regulated, transparent and accountable.
The Salvadoran government had recently discussed its Bitcoin use decision, with the International Monetary Fund, a meeting that Finance Minister Alejandro Zelaya called: productive. The World Bank, however, on that occasion rejected a request for assistance from El Salvador in its attempt to adopt bitcoin as its official currency.
