IMF on El-Salvador Bitcoin legal tender

The International Monetary Fund recently asked El Salvador to remove the legal status of bitcoin.

What happened?

In September 2021, El Salvador became the first country to allow its consumers to use cypto currencies. Fear arose all over the country that bitcoin might bring inflation and instability to the country.

What is IMF Saying?

IMF has warned El Salvador that it will be difficult for the Latin American country to get loan from the international organization if the latter is not removing the legal status of bitcoin. According to IMF, El Salvador might face large consumer protection risks, financial instability by legalising Bitcoin. Also, IMF is of the view that Bitcoin is a controversial currency and it can fluctuate largely.

Why did El Salvador legalise bitcoin?

Bitcoin was legalised to boost economic development in the country. The country installed 200 new cash machines.  El Savador has plans to build a new bitcoin city at the base of a volcano. And Bitcoin is to be used to fund the project.

What happened in El Salvador after legalising Bitcoin?

The Bitcoin has lost half of its value now in the country. Bitcoin was trading at 67,734 USD in November 2021. In January 2022, it is trading at 37,000 USD. El Salvador stays divided with the move. Half the population are against the move. The country provided 30 USD in bitcoins for free as a start. Many citizens are unaware of bitcoin and its uses.

What is World Bank saying?

World Bank is also opposing the legal status given to Bitcoin in El Savador. The World Bank warned the country before the legalisation began. According to World Bank, this was an attention seeking move of the current authoritative regime in the country.

What are the El Salvadorians staying abroad saying?

Remittances make up 20% of the country’s GDP. So according to the El Salvadorians working abroad, sending money through bitcoin will be cheaper to for them.