The IMF has once again warned that bitcoin poses too many systemic risks to be recognized as legal tender, as was done in El Salvador.
A report from the International Monetary Fund (IMF) highlights that cryptocurrencies and digital payment systems like the Chivo wallet can make payments in El Salvador more efficient, expand financial services, and boost the economy. However, due to the high volatility of bitcoin, “BTC’s recognition as legal tender carries significant risks for consumers and financial stability.” In addition, the use of bitcoin creates new budgetary commitments.
“Because of these risks, Bitcoin should not be used as a means of payment. The IMF recommends narrowing the scope of the bitcoin adoption law and urges increased regulation and oversight of the new payments ecosystem. The Chivo system must be obliged to fully protect user funds, both in US dollars and in bitcoins, ”the report says.
IMF analysts emphasize that the El Salvadorian authorities need to direct maximum efforts to ensure consumer protection, enforcement of anti-money laundering and anti-terrorist financing regulations. There are recommendations for banks – the use of conservative liquidity and capital requirements when working with bitcoins.
In June, IMF spokesman Jerry Rice said El Salvador’s decision to make bitcoin legal tender in the country raises “legal and economic” questions. Recently it became known that the authorities of El Salvador are planning to issue “cryptocurrency bonds” in the amount of $ 1 billion, and the funds received will be used to create the “City of Bitcoin”. IMF analysts believe that such ambitious plans require a comprehensive analysis and assessment of the consequences for the country’s economy.
