El Salvador is reportedly in tension with the International Monetary Fund (IMF) over its efforts to merge Bitcoin with its core financial system. Bitcoin is the oldest and most expensive cryptocurrency and is accepted as legal tender in El Salvador along with the U.S. dollar, the country’s legal tender. El Salvador’s financial flirtation with this highly volatile digital asset is not a decision that satisfies the International Monetary Fund.
The International Monetary Fund has asked El Salvador to change its policies surrounding Bitcoin in order to receive $1.4 billion in aid to speed up public debt payments and other financial obligations. Given El Salvador’s staunch pro-crypto stance, its negotiations with the International Monetary Fund are currently at a standstill, Report international publication InfoBae said this week.
Last week, El Salvador received a new warning from a colleague at the International Monetary Fund. The official has made it clear to Salvadoran President Nayib Bukele that the agency is concerned about the financial risks associated with Bitcoin.
Despite ongoing disputes with the International Monetary Fund, Bukele has maintained El Salvador’s engagement with Bitcoin. In 2022, Bukele established the National Bitcoin Office, which is responsible for maintaining all official records related to the digital asset.
The president of El Salvador has approved a Bitcoin bond, allowing the country to raise funds to pay down its national debt while also contributing to Bukele’s ambitious special economic zone “Bitcoin City” through “Volcano Tokens.”
Around April last year, when Bitcoin was trading as low as around $29,449 (approximately Rs. 2.45 crore), BTC-based remittances to El Salvador fell by 18%.
Despite the decline, Blakely reportedly guaranteed Continue buying 1 BTC token every day until the asset becomes unaffordable.
In this case, it is unclear when the IMF will consider handling the financial assistance El Salvador needs.
Meanwhile, the International Monetary Fund has been working with the G20 to develop rules to oversee and regulate the volatile digital asset industry. The organization is also working with the Financial Stability Board (FSB) to draft the rules.
The International Monetary Fund is also developing a new platform to conduct international transactions through CBDC.
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