The International Monetary Fund (IMF) said bitcoin ought not to be utilized as lawful tender in El Salvador and urged the Central American nation to reinforce the regulation and management of its recently settled payment ecosystem.
In an assertion distributed on Monday, the IMF suggested that El Salvador limited the extent of its Bitcoin Law and referenced huge risks that bitcoin has for consumer protection, financial stability, and financial integrity.
The report compared with an authority IMF visit to El Salvador led as per Article 4 of its Constitutive Agreement, which every year outlines the fiscal, monetary, and outside circumstances of its individuals.
IMF Stated Announcement of $1B Bitcoin-based Bonds Wasn’t Discussed in Joint Meetings
The IMF said the declaration of a $1 billion bitcoin-supported bond made by President Nayib Bukele on Saturday was not talked about in joint meetings between government authorities and the organization. As indicated by the IMF, El Salvador’s public debt could raise past 95% of its GDP by 2026 assuming the nation doesn’t carry out solid policy measures to correct fiscal imbalance and straightforwardness constraints on development.
Among the measures to restrict unforeseen fiscal liabilities, the IMF suggested El Salvador consider unwinding the $150 million trust fund made to work with the trade among bitcoin and U.S. dollars.
El Salvador Should Execute Strong Regulations Related to Bitcoin
Concerning the nation’s new payments ecosystem, the IMF said El Salvador should quickly execute more grounded regulation and oversight. It added that the Chivo Wallet ought to be needed to defend funds in U.S. dollars and bitcoin by isolating and ring-fencing reserve resources.
El Salvador likewise should investigate the announcing of bitcoin-related transactions to decide what digital money means for the Salvadoran economy and to intently screen risks, the IMF said.