The International Monetary Fund is urging El Salvador to drop its controversial embrace of bitcoin as its legal tender, saying it “entails large risks” for the Central American nation’s economy.
The IMF made the recommendations after it held negotiations with El Salvador — whose government is asking for a $1.3 billion loan to help pay down its debt. The IMF said El Salvador — which in September became the first country in the world to adopt bitcoin as legal tender alongside the US dollar — is on an “unsustainable path.”
The IMF’s executive board said El Salvador’s bitcoin embrace poses fresh risks to the nation’s “financial stability, financial integrity, and consumer protection, as well as the associated fiscal contingent liabilities.” If current policies hold, the nation’s economy will be saddled with public debt equal to 96% of GDP by 2026, according to the world body.
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