President Bukele laughs off IMF’s Bitcoin warning
The International Monetary Fund (IMF) has warned El Salvador of what it perceives as risks to its “financial stability, financial integrity, and consumer protection” if it continues with Bitcoin as legal currency
The IMF comments in the Article IV economic evaluation follows an annual staff team visit to El Salvador during which it collects economic and financial information and assesses its current financial situation. These visits apply to all member states
El Salvador applied to the IMF for a loan of $1.3 billion last year to help ease its financial struggles but talks have been grounded by Bukele’s Bitcoin ambitions. Bukele has responded to the IMF’s warning by tweeting a meme featuring the Simpsons
IMF executive directors have urged President Bukele to “narrow the scope of the Bitcoin law by removing Bitcoin’s legal tender status.”
The IMF agreed on the importance of financial inclusion and that the Chivo e-wallet, which facilitates Bitcoin payments in the country, could play a role in helping in this regard, but pointed to a lack of regulation and oversight in this “new ecosystem of Chivo and Bitcoin.” Some Directors were also concerned about the country issuing Bitcoin-backed bonds.
The IMF found that El Salvador’s debt levels are unsustainable at current rates and are leading to large financing needs, which the IMF is unlikely to shell out for should Bitcoin remain legal tender.
The Central American nation has consistently bought Bitcoin in the last few months, adding an additional $15 million worth in the past week. Under the direction of President Bukele, El Salvador owns upward of 1,300 Bitcoin.
Bukele made light of the warning by tweeting a Bitcoin meme featuring the Simpsons. “I see you IMF, that’s very nice,” the meme says.