International Monetary Fund issues implicit warning against El Salvador’s Bitcoin law

The International Monetary Fund warned that some of the consequences of a country’s adoption of Bitcoin as its national currency “may be terrible.”

According to Tobias Adrian, financial advisor and head of the IMF Marketing Department, and Rhoda Weeks-Brown, general counsel and head of the Legal Department, cryptocurrencies like Bitcoin (Bitcoin) May be popular in countries where inflation and exchange rates are unstable, and provide a means of payment for those who do not have a bank account. However, the economic cost can be huge.

Two IMF officials Allegedly In addition to macroeconomic stability and financial crises, countries that have adopted cryptocurrencies as their national currencies or “granted legal tender status for crypto assets” also have high domestic prices and assets used in anti-money laundering and counter-terrorism financing measures. risks of. environment.

related: The International Monetary Fund warns that there will be the worst recession in 90 years, and Bitcoin is at risk

“If goods and services are priced in real currency and encrypted assets at the same time, households and businesses will spend a lot of time and resources choosing which funds to hold instead of engaging in production activities,” Adrian and Wicks-Brown said. “If taxes are filed in advance in encrypted assets, and expenditures are mainly denominated in local currencies, government revenue will face exchange rate risk, and vice versa.”

They also claimed that monetary policy “will lose its effect” in general, which means that the widespread adoption of cryptocurrencies will reduce the credibility of any country’s adoption of assets such as Bitcoin or other tokens, and pointed out that “the price of crypto assets fluctuates significantly.”The price of Bitcoin has fluctuated between approximately US$65,000 and US$30,000 this year, and Today reached more than 40,000 US dollars Before falling to $37,000.

Although the IMF blog does not specifically mention El Salvador, El Salvador will Start accepting Bitcoin as legal tender Beginning in September, Adrian and Weeks-Brown stated that making any cryptocurrency a national currency “is an “undesirable shortcut” to more inclusive financial services. Although El Salvador’s President Nayib Bukler (Nayib) Bukele) said he planned Utilize the country’s abundant geothermal energy Generate Bitcoin blocks.

related: El Salvador’s adoption of Bitcoin could jeopardize IMF negotiations: JP Morgan Chase

It is nothing new for the International Monetary Fund to express seemingly negative views on countries that adopt cryptocurrencies.The spokesperson previously stated that something like Marshall Islands recognizes digital currency As legal tender, it “brings risks to the macroeconomic and financial stability and financial integrity.” In this case, the International Monetary Fund stated that the local economies of these islands are under pressure due to the economic impact of the pandemic and may not be resolved by introducing digital currencies.