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February 7, 2022

El Salvador Slams the IMF

El Salvador’s administration has replied to the International Monetary Fund’s most recent assessment on the country’s use of Bitcoin as legal cash. According to the government’s statement, there are no plans to follow the IMF’s proposals.

El Salvador Treasury Minister, Alejandro Zelaya, stated that the government will not be coerced into doing anything. Zelaya told a local television station that the country had sole authority over policy decisions.

“No international organization is going to make us do anything, anything at all…Countries are sovereign nations and they take sovereign decisions about public policy.”

In a recent study, the international body recommended that El Salvador discontinue its Bitcoin trust fund and return any unused cash to the public government.

The organization underlined the asset’s extreme price volatility, as well as its use by criminal elements, in prior reports.

Bitcoin’s price collapse over the last three months, down about 50% from its all-time high in early November, almost seems to underline the first point. In reaction to the IMF study, Zelaya stated that the government complied with money laundering regulations. The regulatory authority also instructed the government to discontinue providing consumers with a $30 incentive to utilize the government-backed Chivo wallet for Bitcoin transactions.

While the IMF feels that the Chivo wallet has potential, it believes that this potential would be maximized by using US dollars rather than Bitcoin.

The El Salvadoran administration, on the other hand, claims that the Chivo wallet has significantly increased financial inclusion. Bitcoin tourism has been considered as an extra benefit of the technology. For the time being, El Salvador’s government sees no need to change its stance on Bitcoin. However, it concedes that it will continue to do more to protect consumers.

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In the midst of all of this, El Salvador’s president, Nayib Bukele, turned to Twitter after bilateral negotiations with the IMF to push for a “gigantic price increase” for the asset. You may recall that the president has been a vocal supporter of the country’s embrace of Bitcoin as an official currency.