Daily Management Review

Financial watchdog urges El Salvador to abandon Bitcoin as legal tender


The International Monetary Fund's board of directors has urged El Salvador to reject Bitcoin as legal cash. The fund's board of directors highlighted the legal status of Bitcoin in the country as a major impediment to the $1.3 billion loan.

Jernej Furman
Jernej Furman
The International Monetary Fund (IMF) board of directors, which includes representatives from 190 nations, has called on El Salvador to decertify Bitcoin as legal cash. According to Bloomberg, quoting an IMF statement, the board emphasized Bitcoin's risks to financial stability, consumer protection, and financial commitments, and cited its legal status in El Salvador as a major impediment to receiving a loan from the fund.

El Salvador requested a $1.3 billion loan from the International Monetary Fund in 2021, but negotiations have stalled. The board of directors must approve the loan. El Salvador's authorities must "limit the scope of the statute by removing Bitcoin's legal tender status," according to the IMF board. El Salvador's issuing of Bitcoin-backed bonds has raised concerns among individual executive directors. On Tuesday, January 26th, the IMF board of directors discussed the annual economic assessment of Central American countries.

The cryptocurrency was recognized as legal tender alongside the US dollar in El Salvador in June 2021, with the law adopted in September. Nayib Bukele, the country's 40-year-old president, has become a crypto celebrity, according to Bloomberg.

source: bloomberg.com