In the report, El Salvador: 2021 Article IV Mission Staff Final Statement, the IMF praised El Salvador's efforts to promote "financial inclusion and growth" but criticized the tool the country's government is using to achieve this goal.
In a recent IMF report praised the way El Salvador handled the situation with COVID-19 - the country's economy grew by 10% in 2021. The International Monetary Fund also recognizes the El Salvador government's efforts to reduce crime, "develop the economy and improve financial inclusion." However, when it comes to Bitcoin, the IMF is harshly critical.
Given the high volatility of Bitcoin, its use at the government level poses increased risks to consumers, financial integrity and stability... The IMF recommends limiting the law on the legalization of Bitcoin, and strengthening regulation and oversight of the new payments ecosystem.
The IMF praises El Salvador's efforts to expand access to financial services, but immediately recommends taking measures that keep 70% of the population from accessing the financial system, and close the government's Bitcoin Trust.
Recently announced plans to use sovereign bond proceeds to invest in Bitcoin will require a very careful analysis of the implications and potential risks for the financial stability.
President Nayib Bukele immediately responded to the IMF's criticism and stated that he did not agree with their conclusions.
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