The IMF asks El Salvador not to recognize the digital currency Bitcoin

The IMF emphasized that using Bitcoin and issuing bonds of this digital currency pose major risks to financial integrity and stability, as well as customer protection.

Bitcoin digital currency. (Photo: AFP/VNA)

On Jan. 25, the International Monetary Fund (IMF) asked El Salvador to change its policy and stop using Bitcoin as a legal currency due to potential risks.

In September 2021, El Salvador became the first country in the world to officially recognize the digital currency by allowing people to use bitcoin in all transactions along with bitcoin. U.S. dollar.

Two months later, the government of that country further announced a plan to build the world’s first “bitcoin city” with investment capital raised by issuing 1 bitcoin. billion dollars Bitcoin Bonds.

Recently, El Salvador has also continuously used Bitcoin’s price drop to increase investments in this cryptocurrency.

Immediately after El Salvador made the decision, the IMF urged President Nayib Bukele’s government to reconsider. The IMF’s latest statement is said to be stronger and to have been made by the IMF’s Executive Board, including representatives of member governments, including the US.

The statement recommends that El Salvador remove the requirement to recognize bitcoin as a legal currency in transactions. The IMF emphasized that using Bitcoin and issuing bonds of this digital currency pose major risks to financial integrity and stability, as well as customer protection.

In the past few days, the value of Bitcoin has plummeted due to the high volatility in Wall Street financial markets. Bitcoin was trading around $37,000/bitcoin on Jan. 25, down almost 50% from the record price of $67,734 in November 2021.

Analysts predict that Bitcoin will face significant competition from other digital currencies, including Ethereum, in 2022.

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