The IMF Once Again Warns El Salvador of Potential Bitcoin Risks

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The small island country of El Salvador shocked everyone when it announced it was making Bitcoin legal tender back in 2021. It was a controversial decision, yet a bold one since the country didn’t get loans by the IMF and was too dependent on the US Dollar. With all the ups and downs regarding Bitcoin’s price, no one was sure what’ll happen. Except for El Salvador’s president Nayib Bukele who firmly believed the gamble will pay off.

For the most part, it did. El Salvador is first in line to buy the dip now, and since it’s investing heavily in Bitcoin, those investments are paying off big. The risks of a collapse seem distant now, even though the country’s critics never seem to stop. The IMF was the first to warn El Salvador of potential Bitcoin risks, and has now done it once again. If you believe president Bukele, it’s all out of spite because the ‘experiment’ is going great.

‘The Government Should Be More Transparent’

The government of El Salvador received a lot of flak for the decision to make Bitcoin legal tender in September 2021. Many countries that are notoriously against cryptocurrencies criticized the move, and so did the IMF. Let’s not forget – the International Monetary Fund was the first to refuse El Salvador loans to cover the glaring gaps in its financial system. That’s the reason president Nayib Bukele turned to Bitcoin, and two years later, it looks like the right move.

Just last month, the government drafted a new law that regulates the issuance of other digital assets by private entities and the state. The IMF was quick to criticize that, and warned about potential risks going forward with Bitcoin as legal tender. It has admitted that risks have not materialized yet, citing the limited use of the cryptocurrency. But, the IMF also noted that underlying risks are still present, while mentioning that the government of El Salvador should be more transparent.

The tech-savvy president has not backed down with buying BTC, instead allowing the government to buy a single one every day. Despite the IMF warnings, the organization also applauded the financial growth the country has seen which was almost 3% in 2022. Unprecedented crime reduction and the great pandemic response were the two major things that were praised, along with a growing tourism sector.

What Does the Future Hold?

Not all Salvadorians are sold on the Bitcoin idea, and many resent the Bitcoin wallet Chivo. However, there’s no question that the government has invested smartly in BTC, and it has made solid profit, especially in the past year. Riding the BTC rollercoaster can be a dangerous thing, but El Salvador has sailed through the storm and is reaping the rewards. The IMF criticism is proof of it.

With Bitcoin prices finally stabilizing and the market growing once again, it could make the country a lot of money. It has helped stabilize the economy, and can be a gold mine if the prices reach 2021 records once again.

February 15, 2023: • No Comments

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