Reuters, Mexico City. Given the risks associated with bitcoin, the International Monetary Fund (IMF) said on Monday that El Salvador should not use it as a legal tender. The IMF said that given the high volatility in the price of bitcoin, its legal use poses a major risk to consumer safety, financial integrity and financial stability.
The International Monetary Fund regularly consults with government officials of member states under Article IV missions before requesting the use of IMF resources. Let us tell you that in September, El Salvador became the first country to approve bitcoin as a legal currency. The US dollar is also used as a legal currency in this country.
“In view of the above risks, bitcoin should not be used as legal tender,” the International Monetary Fund said. It is suggested that the scope of the bitcoin law should be reduced and the new payment ecosystem regulation and supervision be strengthened.
El Salvador’s President Nayib Bukele gave some rationale behind the use of bitcoin. He said that this would help Salvadorians living in other countries to send money to their homes. He also said that the US dollar will also continue to be legal tender. According to him, this will boost financial inclusion, investment, tourism and development.
On the statement of the International Monetary Fund, the President of El Salvador said, “Certainly we do not agree on some points, such as the adoption of bitcoin and the analysis done about our country is interesting.”
The International Monetary Fund forecasts that the economy of El Salvador will grow by about 10 percent in 2021 and 3.2 percent in 2022.