This archive report was first published on 23 November 2021.
On September 7, 2021, El Salvador became the first country in the world to legalize Bitcoin as a legal tender, a move that has raised eyebrows globally.
The International Monetary Fund (IMF) has since weighed in on the matter, issuing a statement after concluding a monitoring mission to the Central American country.
According to the IMF, the use of Bitcoin as a legal tender poses significant risks to consumer protection, financial integrity, and financial stability due to its high price volatility.
The IMF also warned that the use of Bitcoin gives rise to fiscal contingent liabilities, and therefore, it should not be used as a legal tender.
Instead, the IMF recommended narrowing the scope of the Bitcoin law and strengthening the regulation and supervision of the new payment ecosystem.
These warnings come a day after President Nayib Bukele announced plans to build a 'Bitcoin City' powered by a volcano and financed by cryptocurrency bonds.
