In cryptocurrency media, the topic of recognizing Bitcoin as legal tender by El Salvador still dominates. The International Monetary Fund (IMF) notes that the matter may be controversial.
IMF and BTC
Recognition of Bitcoin (BTC) as legal tender comes with “Many macroeconomic, financial and legal issues that require very careful analysis”, reports Reuters, citing a spokesman for the International Monetary Fund (IMF). We also learned that the fund “Closely follows the development of the situation” and will continue “consultation with the authorities ”.
It is also known that Nayib Bukele, the president of El Salvador, spoke to IMF officials about a law that changed the legal status of Bitcoin in his country.
Plans for Bitcoin in an increasingly autocratic regime will likely only increase concerns over corruption, money laundering, and the independence of regulatory agencies
Siobhan Morden, head of Latin America Fixed Income Strategy at Amherst Pierpont wrote in a memo.
The IMF is not very supportive of BTC and cryptocurrencies. It also seems that it does not fully support the ideas of CBDC. In 2018, he warned the Republic of the Marshall Islands (RMI) against issuing the central bank’s digital currency.
The potential benefits appear to be much smaller than the potential costs of economic, reputational and AML / CFT risks [przeciwdziałania praniu pieniędzy i finansowania terroryzmu] and management
– then transferred by the Fund.
The country ignored the warning and in 2020 partnered with Algorand to design a blockchain for its national digital currency.
Is the IMF afraid of BTC?
To understand the IMF’s reluctance to BTC, you need to know exactly what the Fund is.
It is an international organization that operates within the framework of the United Nations. He deals with issues of economic stabilization in the world. It also provides financial assistance to indebted member states, which, in return, are obliged to carry out economic reforms and other stabilizing measures.
The above description sounds reassuring, but the IMF is primarily a political organization that, through the United Nations, is largely subordinate to the United States. So it is pursuing a policy that meets the expectations of the United States. These, in turn, tolerate Bitcoin, but will do so until the cryptocurrency does not threaten the dollar.
The IMF has been criticized many times. In 2004, Nobel Prize winner Joseph Stiglitz noted, for example, that countries that were able to resist pressure from the IMF (Malaysia, China, India) were developing the best, and those that followed the advice of the organization paid for it with an economic disaster (e.g. Indonesia, Thailand, Argentina).
The IMF is not making any sharp moves against BTC so far, but it should be remembered that it may do so as the cryptocurrency begins to gain importance. For example, when more countries start to accept Bitcoin and add it to their currency reserves, which may weaken the dollar. It is possible that the new law of El Salvador is also a saying “I check” the current world order.