Tech

IMF calls on El Salvador to abandon bitcoin as a means of payment

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The International Monetary Fund (IMF) has asked El Salvador to revoke the legal tender status of the digital currency Bitcoin. The Central American state was the first country in the world to give the cryptocurrency this status in September 2021. According to a statement on Tuesday, the IMF board emphasized that there are major risks associated with the use of Bitcoin – for financial stability, financial integrity and consumer protection as well as the associated tax contingencies.

Digital forms of payment such as the Chivo e-wallet introduced in the Central American country could promote financial inclusion, said the IMF. The new economic environment around Chivo and Bitcoin must be strictly regulated and monitored. The occasion was talks on the economic situation, which the Washington-based UN special organization regularly conducts with member states.

El Salvador has been negotiating a $1.3 billion loan package with the IMF for some time. The Central American country applied for the loans in the summer of 2021 and aimed to conclude negotiations with the IMF in September last year, as the president has said announced in July 2021.

According to El Salvador’s bitcoin law, any merchant technically able to do so must accept the cryptocurrency. Taxes can also be paid in it. The controversial President Nayib Bukele also announced in November the construction of a “Bitcoin City”.

Bitcoin is the most well-known digital currency. It is not controlled by a central bank, but created by a decentralized, energy-intensive computer process. Bitcoin is considered an object of speculation and is subject to violent price fluctuations.

The price of a bitcoin was just under $37,000 on Tuesday – it had reached a high of around $68,000 in November. According to estimates based on information from Bukele on Twitter, El Salvador has now bought around 1800 Bitcoin. A few days ago, Bukele announced on Twitter that El Salvador had bought 410 Biitcoin for $15 million, i.e. at a price of $36,585.


(fds)

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