IMF Urges El Salvador To Remove Bitcoin As Legal Tender (cnbc.com)
- Reference: 0158030719
- News link: https://slashdot.org/story/22/01/25/2232240/imf-urges-el-salvador-to-remove-bitcoin-as-legal-tender
- Source link: https://www.cnbc.com/2022/01/25/drop-bitcoin-as-legal-tender-imf-urges-el-salvador.html
> IMF 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 report, which was published after bilateral talks with El Salvador, went on to "urge" authorities to narrow the scope of its bitcoin law by removing bitcoin's status as legal money. In Sept. 2021, the Central American nation became the world's first country to adopt the cryptocurrency as legal tender, alongside the U.S. dollar.
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> The IMF report went on to say that some directors had expressed concern over the risks associated with issuing bitcoin-backed bonds, referring to the president's plan to raise $1 billion via a "Bitcoin Bond" in partnership with Blockstream, a digital assets infrastructure company. Part of El Salvador's nationwide move into bitcoin also involved launching a national virtual wallet called Chivo that which offers no-fee transactions and allows for quick cross-border payments. For a country where 70% of citizens do not have access to traditional financial services, Chivo is meant to offer a convenient onramp for those who have never been a part of the banking system.
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> IMF directors agreed that the Chivo e-wallet could facilitate digital means of payment, thereby helping to "boost financial inclusion," though they emphasized the need for "strict regulation and oversight." Many Salvadorans have reported cases of identity theft, in which hackers use their national ID number to open a Chivo Wallet, in order to claim the free $30 worth of bitcoin offered by the government as an incentive to open a digital wallet. For months, the IMF has bemoaned Bukele's bitcoin experiment. [...] El Salvador has also been trying since early 2021 to secure a $1.3 billion loan from the IMF -- an effort which [3]appears to have soured over this bitcoin row. The country will need to figure out some other backstop to shore up its finances. The IMF predicts that under current policies, public debt will rise to 96% of GDP by 20216, putting the country on "an unsustainable path."
[1] https://www.cnbc.com/2022/01/25/drop-bitcoin-as-legal-tender-imf-urges-el-salvador.html
[2] https://www.imf.org/en/News/Articles/2022/01/25/pr2213-el-salvador-imf-executive-board-concludes-2021-article-iv-consultation
[3] https://www.bloomberg.com/news/articles/2022-01-25/imf-board-urges-el-salvador-to-ditch-bitcoin-as-legal-tender?sref=ctSjKj2N
True concern is that it might work (Score:1)
I'm not too sure myself on how well this shift to use BTC as the national currency will play out.
However to me, it seems pretty clear that the thing that really concerns the IMF here is that it might actually work out - and if it does, they would have other countries moving to a currency the IMF cannot control as well.
digital means of payment (Score:2)
The magstrip on a 1980's era credit card are formatted with ABA Track 2 encoding. Which is ... a digital format (4-bits per digit and structures in a fairly flexible way using start/end sentinels).
I'm sure we can agree that electronically readable binary digits on a magnetic strip or embedded silicon wafer is digital. But technically hand-written numbers on a ledger is literally digital. And I suspect a bank teller 75 years ago sending a telegraph to another bank in order to do a wire transaction might a ti
Risk (Score:2)
> Many Salvadorans have reported cases of identity theft, in which hackers use their national ID number to open a Chivo Wallet, in order to claim the free $30 worth of bitcoin offered
This sort of thing is the biggest risk to El Salvador itself.
The other risks the IMF worries about are risks to the IMF.
Re: (Score:3)
> The other risks the IMF worries about are risks to the IMF
I just wanted to quote this for emphasis.
Re: (Score:2)
This does NOT mean there are not also extremely high risks to the citizens of El Salvador.
Re: (Score:2)
Totally agree.
I am just pointing out that the IMF is not doing it FOR the citizens of El Salvador, they are doing it for the IMF.