Thursday. 09.02.2023
CRYPTOCURRENCY

IMF urges El Salvador to abandon Bitcoin as a means of payment

About 70% of El Salvador's approximately 6 million residents have no access to traditional financial services. Many depend on remittances from relatives in the United States
FILED - Illustration - A bitcoin is pictured on a table. The International Monetary Fund (IMF) has urged El Salvador to abandon Bitcoin as a means of payment. Photo: Ina Fassbender/dpa.
The International Monetary Fund (IMF) has urged El Salvador to abandon Bitcoin as a means of payment. Photo: Ina Fassbender/dpa.

The International Monetary Fund (IMF) has urged El Salvador to abandon Bitcoin as a means of payment.

The Central American country became the first country in the world to adopt Bitcoin as legal tender in September last year.

But after a meeting on Tuesday, the IMF executive warned that the adoption of a cryptocurrency as legal tender "entails large risks for financial and market integrity, financial stability, and consumer protection."

It also can create "contingent liabilities," according to the International Monetary Fund.

Directors agreed on the importance of boosting financial inclusion and noted that digital means of payment — such as the Chivo e-wallet— could play this role.

However, they emphasized the need for strict regulation and oversight "of the new ecosystem of Chivo and Bitcoin."

Best known digital currency

Bitcoin is the best-known digital currency. It is not controlled by a central bank but is rather created by a decentralized and enormously energy-intensive computer process.

The cryptocurrency is subject to extreme fluctuations in its value.

El Salvador has used the US dollar as currency since 2001, which has made the country dependent on the monetary policy of the US Federal Reserve.

About 70 per cent of El Salvador's approximately 6 million residents have no access to traditional financial services. Many depend on remittances from relatives in the United States.

IMF urges El Salvador to abandon Bitcoin as a means of payment
Comments