Following its annual visit, the IMF said that the dangers associated with El Salvador’s acceptance of bitcoin “had not materialized,” although caution is advised.
The banking body asked the Central American country to reevaluate its crypto adoption expansion ambitions.
The International Monetary Fund said that the dangers associated with El Salvador’s acceptance of bitcoin “had not materialised” due to its “limited” usage, although caution is advised.
“Given the legal concerns, fiscal fragility, and speculative character of crypto markets, authorities should reassess their intentions to increase government exposure to bitcoin,” the IMF said in a statement released on Friday.
The statements follow an annual visit by the United Nations’ financial agency to El Salvador, which followed a $600 million bond payment by the Central American country last month.
El Salvador declared bitcoin the official currency in September 2021, much to the anger of the IMF, and its president, Nayib Bukele, has been an outspoken bitcoin advocate on Twitter. His optimism has not exactly paid off, since paper losses on the nation’s bitcoin investments are presently projected to be at least 50 percent.
Due to the opaque nature of El Salvador’s acquisitions and assets, specific investment quantities are unclear. “Greater transparency over the government’s bitcoin activities and the financial status of the state-owned bitcoin wallet (Chivo) is necessary,” stated the IMF.
El Salvador’s economy has achieved a “full return” to pre-pandemic levels, the IMF said, despite the fact that bitcoin investments have yet to pay off. This is due to “the efficient government response to the health crisis.”
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