IMF tells El Salvador not to use bitcoin as legal tender

The bitcoin should not be adopted as legal tender in The Savior because its volatility implies risks for consumers and the integrity of the financial system of the Central American country, recommended on Monday the International Monetary Fund (IMF).

The Savior became in September the first country in the world to adopt the cryptoactive as legal tender, parallel to the US dollar. On Saturday, the president of the country, Nayib B Watchannounced his plan to build the first “Bitcoin City“initially financed with bonds backed by bitcoines.

But a mission of the IMF, which was recently in The Savior, recommended to the authorities not to use the bitcoin as legal tender due to the high risks it implies and suggests greater controls in the implementation of the policy.

“Given the high volatility of the bitcoin, its use as legal tender implies great risks for consumer protection, the integrity of the financial system and financial stability, “said the IMF it’s a statement.

“Its use can also cause fiscal contingencies. Due to these risks, bitcoin should not be adopted as legal tender. The mission recommends limiting the scope of the law. Bitcoin and urges to strengthen the regulation and supervision of the new payments ecosystem, “he added.

The agency, which estimates that the economy of The Savior will have a growth of 10% in 2021 and 3.2% in 2022, acknowledged that the adoption of the bitcoin promotes financial inclusion and economic growth, but warned of possible dangers in the finances of the impoverished nation.

“The International Monetary Fund has just published its technical assessment of The Savior (…) And although we obviously do not agree on some things, such as the adoption of bitcoin, the analysis they make of our country is interesting, “he replied Watch and Twitter.

The IMF, which estimates that the country’s public debt could reach 85% of its Gross Domestic Product (GDP), recommended implementing a fiscal consolidation package that amounts to approximately 4% of GDP over the next three years.

The Savior and the IMF They are negotiating a financing agreement for 1.3 billion dollars.

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