The IMF is very concerned about the use of Bitcoin as state currency in El Salvador and the institution is asking the country to back down.
This is a new blow for the defenders of cryptocurrencies and in particular of Bitcoin. The most popular of all the virtual currencies which had made a start to the year 2022 around 42,000 euros is now in difficulty. Affected by the cryptocurrency crash of the past few days, Bitcoin has lost value and is now worth just over $33,000.
But the big news of 2021 for cryptocurrency was undoubtedly the passage of the Bitcoin law in El Salvador. The small Central American country wanted to free itself from the customs duties and taxes placed on the American dollar, widely used as cash in the country, its new president, Nayib Bukele, a great defender of cryptocurrencies, therefore decided to bitcoin a state currency.
Since the promulgation of this law, it is therefore possible to carry out all imaginable transactions with Bitcoin. Buying your bread or paying your taxes, as many actions as the government encourages to carry out with Bitcoin. And while the cryptocurrency was looking great midway through the year, surpassing its ATH at over $60,000, El Salvador seemed to be the example for the world to follow.
The IMF no longer wants to hear about Bitcoin in El Salvador
But today, when cryptocurrency is doing badly, it is the IMF, the international monetary fund, which is pointing the finger at the problems of cryptocurrencies. Their high volatility, which is also part of their strength, is “too great a risk” according to the IMF, which is also worried that El Salvador is using cryptocurrency to issue bonds.
Finally, the IMF today urges El Salvador to backtrack, as long as it is not yet too late and the cryptocurrency has not lost all its value, although the shortfall is already significant.
If the announcement by the monetary fund is not surprising (it is not the first time that the institution has worried about El Salvador’s actions), Bukele’s policy seems for the moment to have carried its fruits and Bitcoin remains a product with a high value, which has allowed the small Pan-American republic to emerge from the shadow of the United States.
Two opposing visions of the economy
In the American neighbor precisely the ideas of Bukele seem to have germinated and the new mayor of New York, Eric Adams, as well as his counterpart of Miami are fervent defenders of cryptocurrencies. Two visions and two speeches, but also different interests when we know that the IMF has always had a very firm position regarding virtual currencies and decentralized currency as a whole which would reduce its impact to zero.
It is therefore logical to see the IMF banging its fist on the table to keep the situation the same, its survival depends on it, but it is also not wrong to consider Bitcoin as a value at risk, and whose course is capable of soaring as well as collapsing without much logic or capacity for premeditation.