The International Monetary Fund (IMF) on Tuesday urged El Salvador to eliminate bitcoin as its legal currency, highlighting “great risks associated” with the use of cryptocurrency.
The body’s executive directors “urged the authorities to limit the scope of the bitcoin law, eliminating its quality as a legal currency,” the IMF said in a statement.
The IMF’s executive board has urged President Nayib Bukele’s government to officially stop using bitcoin, which it adopted last September, citing risks to “financial stability, financial integrity and consumer protection, as well as potential tax contingencies.” .
“Some directors have also expressed their concern about the risks associated with issuing bitcoin-backed bonds,” added the text, issued after the IMF’s executive board completed the periodic review of the country’s finances, known as Article IV.
El Salvador became on September 7, 2021 the first country in the world to officially use bitcoin, legalizing its use in all transactions alongside the US dollar, adopted two decades ago.
Before the IMF’s executive board, made up of representatives from all member countries, including the United States, its main shareholder, asked for its elimination, the Fund’s technical staff had warned against using bitcoin due to its “high volatility”. .
“Bitcoin should not be adopted as a legal currency,” officials said in November, as they ended their assessment of the Salvadoran economy.
This Tuesday, the IMF’s executive board supported the objective of “promoting financial inclusion” in El Salvador, and recognized that digital payment methods, such as the “Chivo” electronic wallet, could advance in this direction.
Bitcoin was trading around US$37,000 on Tuesday, while reaching a record high in November of US$67,734.