The International Monetary Fund has criticized El Salvador’s decision to accept Bitcoin (BTC / USD) as legal tender, explaining that there could be legal implications in the country’s decision.
A few days ago, El Salvador became the first country to accept Bitcoin as legal tender, as President Nayib Bukele noted that its use can make it easier for Salvadorans in the diaspora to send money home.
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Gerry Rice, an IMF spokesperson, stated that the adoption of Bitcoin can raise many questions on legal, financial and macroeconomic issues. The spokesperson added:
We are closely monitoring developments and will continue our consultations with the authorities.
Foreign investors back the IMF
The IMF has also been encouraged by foreign investors in El Salvador to avoid the adoption of Bitcoin in the country as legal tender. They are concerned that the situation in the country will ruin their chances and the discussions they are having with the international body, according to Donato Guarino of Citi.
The Fund wants to meet with Bukele to discuss the Bitcoin law as the country seeks a billion dollar program.
But Bukele has an important role to play regarding the fate of El Salvador when it comes to accepting Bitcoin as legal tender. It will largely depend on him to use his indisputable political capital to control a large consolidated fiscal deficit, as some of the investors pointed out.
Bitcoin to have an equal footing with the dollar
Currently, El Salvador uses UD dollars as its main and legal tender. If the law on Bitcoin is passed, it would mean that cryptocurrency will be considered in the same way as dollars when it comes to making and receiving payments. All companies in the country will be legally authorized to accept and pay with Bitcoin.
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