The International Monetary Fund has said that El Salvador’s recent decision to make bitcoin legal tender in the country could raise legal and financial concerns.
In Thursday’s press briefing from the International Monetary Fund, or IMF, spokesman Gerry Rice said the group was already discussing loans to support the country’s economy with lawmakers in El Salvador, a pandemic-related emergency last year. The money was approved. However, Rice said the IMF team would meet with President Nayib Bukele today and that implied crypto would be a potential topic for discussion.
“The adoption of bitcoin as legal tender raises a number of macroeconomic, financial and legal issues that require very careful analysis,” Rice said. “We are following developments closely, and we will continue our consultations with the authorities.”
IMF spokespersons have often expressed concern about countries adopting digital currency. In March, the group issued a similar warning against the Marshall Islands, recognizing its digital sovereign currency called SOV as legal tender, as it could pose similar legal and financial risks. In that case, a spokesman said the local economy of the islands was affected by the economic fallout of the pandemic and would likely not be corrected with the SOV.
related: IMF says Marshall Islands digital currency ‘will increase risk’
In the case of El Salvador, the time between the initiation of the idea and the action appears to be shorter. President Bukele first announced that he would propose a bill making bitcoin (BTC) legal tender in El Salvador in a pre-recorded video message at the Bitcoin 2021 conference later this week. The bill was passed yesterday in the Legislative Assembly of the country with a majority.
While the country is still seeking support from the IMF regarding the pandemic this year, it has begun to consider the energy needs of bitcoin miners. Bukele said he would direct state-owned power company Lazio to provide some facilities for miners to use geothermal energy from the country’s volcanoes – El Salvador currently in Ahuachapán and two geothermal plants in Berlin. operates.
“Crypto assets can pose significant risk,” Rice said. “Effective regulatory measures are very important when dealing with them.”