IMF wants El Salvador to limit “public sector exposure to Bitcoin” The financial institution’s statement follows an August statement in which it talked about “mitigating the risks posed by Bitcoin.”
The International Monetary Fund (IMF) has recommended that El Salvador reduce the scope of its Bitcoin law and limit its citizens' exposure to Bitcoin.
IMF spokeswoman Julie Kozak said at a press conference:
“Our recommendations include narrowing the scope of Bitcoin law, strengthening the regulatory framework and oversight of the Bitcoin ecosystem, and limiting public sector exposure to Bitcoin.”
Kozak added that the IMF continues to consult with El Salvador, and that “addressing the risks arising from Bitcoin is a key element of these discussions.”
The Central American country is familiar with the IMF's position on the use of Bitcoin. Notably, this issue dates back to 2021, when El Salvador made Bitcoin its legal tender. Following its formal adoption, the IMF issued a statement in November 2021 recommending “narrowing the scope of the Bitcoin Act” while “strengthening the regulation and supervision of new payment systems.”
This was called for again in January 2022, when the IMF recommended that El Salvador reconsider its decision regarding Bitcoin as the country's legal tender.
More recently, the IMF released a statement in August that focused, among other things, on the need to “mitigate the risks posed by Bitcoin.” However, the Financial Services Agency stated that regarding Bitcoin, “While many of the risks have not materialized, there is a joint recognition that further efforts are needed to increase transparency.''
Still focused on Bitcoin
Despite these ongoing statements and exchanges from the IMF, El Salvador remains committed to seeing Bitcoin rise domestically.
But while the government is keen to increase adoption numbers, El Salvador's pro-Bitcoin president Nayib Bukele recognizes more needs to be done. In a recent interview with Time magazine, Bukele admitted that the Bitcoin strategy for El Salvador was a “net positive” but did not result in the “widespread adoption” they had hoped for.
Despite this, Bukele remains dedicated and even buys more Bitcoin when prices drop. The country has also pledged to use profits from a Bitcoin trust to build 20 schools in an effort to make cryptocurrencies more attractive to its citizens.
