The International Monetary Fund has raised an alarm, warning countries against accepting cryptocurrencies as legal tender.
This warning comes as El Salvador becomes the first country in the world to validate bitcoin as a means to pay for everything from basic everyday purchases to public bills and taxes.
The financial institution based in Washington D.C. indicated in an article released towards the end of July that mainstreaming the use of cryptocurrencies could pose a significant threat to “macroeconomic stability” and may harm financial integrity, given the frequent attribution of cryptocurrencies to illegal activity.
Although the IMF’s post was not directed to El Salvador, but given that the lender is discussing a deal with El Salvador for a US$ 1 billion loan, this warning may be taken as an indication that the crypto moves by El Salvador’s President Nayib Bukele could obfuscate relations.
“I don’t think they’ve thought through all of the implications,” said Ricardo Castaneda, a senior economist. “It’s an experience. It will be interesting to see if this works or not, but the implications, if not, are very serious,” he added.
Bukele will approve bitcoin legal tender starting from September 7. And though many citizens, corporations and stakeholders in the finance sector consider the move absurd and shocking, the president is convinced that this will open up a well of prosperity for the country and will be “a great leap forward for humanity.”
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