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IMF acknowledges progress in El Salvador’s Bitcoin strategy
The IMF highlighted the need to ensure transparency around the country's Bitcoin policy.
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Updated: Aug. 7, 2024 at 2:30 pm UTC
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The International Monetary Fund (IMF) conceded that the potential risks tied to El Salvador’s adoption of Bitcoin as legal tender have not materialized.
On Aug. 6, the financial regulator’s team, led by Raphael Espinoza, revealed progress in its discussions with El Salvador about supporting the country with financial programs. This development follows over two years of stalled talks regarding the nation’s Bitcoin policies.
The discussions focused on strategies to strengthen public finances, increase bank reserves, and enhance governance. They also addressed improving transparency to mitigate risks associated with Bitcoin investments.
According to the IMF, while the anticipated risks have not yet emerged, there is a mutual recognition of the need to boost transparency and address potential financial stability concerns related to Bitcoin.
The regulator stated:
“Progress has been made in the negotiations toward a Fund-supported program, focused on policies to strengthen public finances, boost bank reserve buffers, improve governance and transparency, and mitigate the risks from Bitcoin.”
The IMF’s statement comes after years of criticism regarding El Salvador’s 2021 decision to make Bitcoin legal tender. Since then, El Salvador has launched several initiatives, including a Bitcoin-linked freedom visa, Bitcoin reserves, mining projects, and plans for a tax-free Bitcoin City.
Max Keiser, a Senior adviser to El Salvador President Nayib Bukele on Bitcoin, emphasized the significance of the IMF’s concession, claiming that the regulatory body has backtracked on its previous comments about El Salvador’s Bitcoin risk.
He added:
“Bitcoin ‘de-risked’ El Salvador. We see it in their skyrocketing sovereign bonds. The new Bitcoin Bank Law will bring in $100 billion in new private capital.”
Meanwhile, El Salvador has continued to increase its Bitcoin holdings through strategic daily acquisitions over the past year. The country currently holds over 5,800 BTC, valued at approximately $332 million, according to official data.
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Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
Nayib Armando Bukele Ortez is a Salvadoran politician and businessman who is the 46th and current President of El Salvador.