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El Salvador’s Bitcoin adoption could threaten its financial stability, IMF warns By BTC Peers

by Mike Robinson

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© Reuters. El Salvador’s Bitcoin adoption could threaten its financial stability, IMF warns

El Salvador, according to the International Monetary Fund(IMF), could face financial instability as a result of its decision to issue legal tender.

While the IMF recognizes that Bitcoin and other digital assets may facilitate efficient payment, the IMF warned that they could be made legal tender to disrupt the financial market. The IMF stated in a statement:

Given Bitcoin’s high price volatility, its use as a legal tender entails significant risks to consumer protection, financial integrity, and financial stability. There are also fiscal contingent liabilities that can be incurred by Bitcoin’s use.

El Salvador, in its opinion, should reduce the jurisdiction of the Bitcoin Law. Instead, it should focus on strengthening regulations and supervision on the new payments system.

It seems that neither the IMF or any other international agency can stop El Salvador pursuing their Bitcoin goals. The Central American nation became the world’s first country to recognize Bitcoin as legal money in September. Later, the government created an electronic Bitcoin wallet called Chivo.

The government was also involved in the purchase of Bitcoin. El Salvador bought more Bitcoin as the price dropped late last month.

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