The International Monetary Fund on Tuesday urged El Salvador to remove Bitcoin as a legal lender citing concerns over financial and market integrity risks.
"They [IMF Executive Directors] stressed that there are large risks associated with the use of Bitcoin on financial stability, financial integrity, and consumer protection, as well as the associated fiscal contingent liabilities," the IMF said in a press release. "They urged the authorities to narrow the scope of the Bitcoin law by removing Bitcoin's legal tender status."
IMF said the COVID-19 pandemic interrupted ten years of growth, but El Salvador is rebounding quickly.
"Robust external demand, resilient remittances, and a sound management of the pandemic--with the help of a disbursement under the Rapid Financing Instrument approved in April 2020--are supporting a strong recovery," the IMF said.
Against this backdrop, IMF said public debt vulnerabilities emerged and persistent fiscal deficits are leading to large and increasing financing needs.
"Since September 2021, the government has adopted Bitcoin as legal tender. The adoption of a cryptocurrency as legal tender, however, entails large risks for financial and market integrity, financial stability, and consumer protection. It also can create contingent liabilities," the Fund warned.
( With inputs from ANI )
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