For the IMF, playing with cryptocurrencies can be synonymous with playing with fire.
The Fund therefore urged El Salvador on Tuesday to remove bitcoin as legal tender, warning of the "significant risks associated with its use for financial stability, financial integrity and consumer protection".
Some IMF administrators “have also expressed concern about the risks associated with issuing bitcoin-backed bonds.”
This request is a serious setback for the Salvadoran government as the Central American country became the first in the world to adopt this cryptocurrency on September 7, thirteen years after its creation.
The recommendation from the international institution in Washington also casts further discredit on bitcoin.
A “scam” according to Salvadorans
Bitcoin today has legal value in El Salvador in the same way as the US dollar, which itself replaced the national currency twenty years ago. Its adoption as a second legal tender was decried in the fall during protests in the streets of San Salvador against the government's economic policy. The demonstrators, crying "the scam", believed that the adoption of this currency would harm the economy. In November, the Fund itself warned against using bitcoin, given its high volatility.
Tuesday's recommendation comes on the occasion of the publication of the annual report on the country's economic situation.
The IMF recalls that the pandemic interrupted ten years of growth, "but El Salvador is rebounding quickly" thanks to "robust" external demand, "resilient" remittances and "good management of the pandemic".
The Salvadorian economy had contracted by 7.9% in 2020, before growing by around 10% in 2021. The IMF expects growth of 3.2% this year.
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