IMF files in El Salvador for decisions on Bitcoin bonds

The IMF criticized El Salvador for its decision to make Bitcoin legal tender in a statement published on the country’s economy.

The International Monetary Fund (IMF) has issued a critical statement regarding El Salvador’s Bitcoin bonds. The global body published a report saying the country should address any risks.

The statement was given during a virtual discussion and covered several aspects of using the new technology. It noted the economic developments, prospects and risks taking place in the country. Among them is that El Salvador’s economy grew at a healthy pace last year, bucking a global trend.

However, it believes there are risks and problems. One of these is the fact that “Bitcoin’s risks should be addressed.” As it has done in the past, the IMF believes there are potential macroeconomic and microeconomic risks to Bitcoin’s status as legal tender. The statement reads,

“While risks have not materialized due to the limited Bitcoin use so far – as suggested by survey and money transfer data – use could grow given legal tender status … underlying risks to financial integrity and stability, fiscal sustainability and consumer protection persists…”

It also calls for greater transparency over government transactions in Bitcoin and the financial situation of the Chivo wallet. This is to assess underlying fiscal policy conditions and counterparty risk.

El Salvador also recently passed a bill that would allow Bitcoin bonds. This has also angered the IMF, which has repeatedly shown irritation at the country’s decisions.

The IMF has previously criticized El Salvador for BTC adoption

The IMF has several times previously criticized El Salvador’s decision to adopt BTC as legal tender. The authority has asked El Salvador to drop Bitcoin as a currency, although President Nayib Bukele has stuck to his guns.

The primary concerns are macroeconomic, financial and legal issues. It has repeatedly expressed these concerns since 2021, but it has not had much impact. The Central African Republic also recently made Bitcoin legal tender, resulting in rejection from the IMF.

Bitcoin Experiment Ups and Downs

El Salvador’s experiment with Bitcoin has been something of a hit-and-miss. Tourism in the country has shot up by 30% since it legalized Bitcoin, which was expressly planned by the government. However, Bitcoin’s volatility has also hit the country’s coffers hard.

The finance minister has said the experiment is working, although others seem to disagree. Measuring the success of the wallet is difficult, given how little time has passed. Moody’s believes that there is enough concern that El Salvador’s credit outlook has weakened.