Furthermore, the use of the cryptocurrency could negatively influence consumer protection and the ability to receive loans. El Salvador was the first country in the world to make Bitcoin legal tender in September 2021. Previously, El Salvador used the US dollar as legal tender since 2001, making the country's monetary policy dependent on the US federal reserve.
The IMF urged El Salvador to narrow the scope of the Bitcoin Law by removing Bitcoin's legal tender status, adding the use of the cryptocurrency as legal tender created ‘contingent liabilities.’
El Salvador's President Nayib Bukele promoted Bitcoin as a way for residents to save on remittance commissions and expand access to the financial system. The IMF has expressed concern over Bukele's expressed interest in issuing bonds backed by Bitcoin.
However, adoption of the cryptocurrency since parliament approved the measure in June 2021 has been uneven with only a few businesses accepting Bitcoin and technical issues plaguing the government cryptocurrency app.
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now