The International Monetary Fund 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 of the International Monetary Fund or the IMF, spokesman Gerry Rice he said The group has already discussed with lawmakers in El Salvador a loan to support the country’s economy, as it approved emergency funds related to the pandemic last year. However, Rice said the IMF team would meet with President Nayib Bukel today and the proposed crypto would be a likely 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 closely monitoring developments and will continue to consult with the authorities.”
IMF spokesmen have often expressed concern about countries that use digital currency. In March, the group issued a similar warning against recognizing the Marshall Islands as digital currency called SOV as legal tender, as it could pose similar legal and financial risks. In such a case, the spokesman said that the local economy of the islands was tense by the economic downturn of the pandemic and would probably not be corrected by the SOV.
In the case of El Salvador, the time between the introduction of ideas and actions is seemingly short. President Bukele first announced that he would propose a bill on bitcoin (BTC) legal tender in El Salvador for a pre-recorded video message at the Bitcoin 2021 conference this weekend. The legislation was passed yesterday with a supermajority in the nation’s legislature.
Although the country is still seeking IMF support for this year’s pandemic, it has already begun to consider the energy needs of bitcoin miners. Bukele said he would issue instructions to the state power company LaGeo to provide miners with certain facilities to use geothermal energy from volcanoes in the country – Salvador currently operates two geothermal power plants in Ahuachapan and Berlin.
“Cryptocurrencies can pose significant risks,” Rice said. “Effective regulatory measures are very important in addressing them.”