IMF warns El Salvador against government's Bitcoin involvement
The IMF noted the speculative nature of crypto, along with the country's fiscal vulnerability, and recommended caution in expanding exposure to Bitcoin
Image: Shutterstock
The International Monetary Fund (IMF) has cautioned El Salvador against increasing its government's involvement with Bitcoin due to the speculative nature of crypto markets.
In a statement on February 10th, the IMF stated that the risks associated with Bitcoin have not yet affected El Salvador as its use of Bitcoin is limited, but the country should exercise caution. The IMF staff recently visited El Salvador.
The International Monetary Fund has advised El Salvador to address the risks associated with Bitcoin that could threaten the country's fiscal sustainability, consumer protection, financial integrity, and stability.
The IMF emphasised the need to recognise these risks, given that the use of Bitcoin in El Salvador may increase since it has been recognised as a legal tender in the country since September 2021.
The International Monetary Fund asked El Salvador to reconsider its plan to issue tokenised bonds due to their legal and financial risks.
