The International Monetary Fund (IMF) has returned to attack the Central American nation of El Salvador over its stance and adoption of Bitcoin (BTC).
Thus, the IMF once again declared its opposition to the use of bitcoin as legal tender due to the various risks associated with cryptocurrency and highlighted that this could cause problems for the nation.
So the warning came a day after Salvadoran President Nayib Bukele announced his plan to build a “bitcoin city” fueled by a volcano and financed by bitcoin bonds.
Thus, El Salvador is the first country in the world to adopt bitcoin as a currency alongside the US dollar, which has been used for two decades. The country’s bitcoin law took effect in September.
In addition, El Salvador purchased 1,120 BTC, according to Salvadoran President Nayib Bukele.
Therefore, in its 2021 Article IV mission staff completion statement to El Salvador, the IMF detailed that the country should stop adopting Bitcoin.
“Given the high volatility of bitcoin’s price, its use as a currency involves significant risks to consumer protection, financial integrity and financial stability. Its use also gives rise to contingent tax liabilities. Because of these risks, bitcoin should not be used as legal tender”, he said.
El Salvador must give up Bitcoin
So the IMF asked El Salvador to drop its Bitcoin plans and repeal the “Bitcoin law”.
“The plans to issue sovereign bonds and use the proceeds to buy bitcoins and finance infrastructure plans announced on November 20, took place after the completion of the technical work of the mission and were not discussed with the authorities”, clarified the IMF.
However, the President of El Salvador, Nayib Bukele, belittled the IMF’s recommendations and declared and said that the nation is sovereign to make its decisions.
“We are sovereign to make our decisions. Although we obviously don’t agree on some things, such as the adoption of bitcoin, the IMF’s analysis of our country is interesting, but we don’t have any plans to change anything regarding cryptocurrencies,” he said.
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