IMF Calls for ‘Careful Analysis’ of Bitcoin as Legal Tender; BIS Head says It’s an ‘Interesting Experiment’
The International Monetary Fund (IMF) has voiced its displeasure on El Salvador’s move to become the first country in the world to adopt Bitcoin as legal tender. The law puts Bitcoin on equal footing with the US dollar in the country, which adopted the dollar as its official currency 20 years ago.
“Crypto assets can pose significant risks, and effective regulatory measures are very important when dealing with them,” said Gerry Rice, an IMF spokesman, during a scheduled press briefing.
President Nayib Bukele is facilitating Bitcoin mining in the country through the use of volcanic geothermal energy while using BTC in the exchange of goods and services and for remittances.
But the IMF said on Thursday that this has a number of economic and legal concerns.
“Adoption of bitcoin as legal tender raises a number of macroeconomic, financial, and legal issues that require very careful analysis,” said Rice while speaking in Washington. “We are following developments closely, and we’ll continue our consultations with the authorities.”
Rice said the IMF is conducting meetings with Bukele to discuss the bitcoin law and a potential credit program “including policies to strengthen economic governance.” El Salvador is reportedly in discussions with the IMF about a $1 billion program.
The nation’s bonds dropped, pushing the yield on its bonds due in 2025 up to 7.8%. Their bonds are the worst performers in emerging markets this week.
On Friday, Benoit Coeure, head of the innovation hub at the Bank for International Settlements, called El Salvador’s Bitcoin move an “interesting experiment.”
“El Salvador, that is an interesting experiment indeed,” said Coeure at the launch of a regulatory research hub with the Bank of England.
“We have been clear at the BIS that we don’t see bitcoin as having passed the test of being a means of payments. Bitcoin is a speculative asset and should be regulated as such.”