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IMF sees legal, economic issues with El Salvador bitcoin move

El Salvador, on June 9, became the first country in the world to adopt bitcoin as legal tender, with President Nayib Bukele touting its use for its potential to help Salvadorans living abroad to send remittances back home.

June 10, 2021 / 10:45 PM IST

The International Monetary Fund (IMF) said on June 10 that it has a number of economic and legal concerns regarding the move from El Salvador to make bitcoin a parallel legal tender.

El Salvador, on June 9, became the first country in the world to adopt bitcoin as legal tender, with President Nayib Bukele touting its use for its potential to help Salvadorans living abroad to send remittances back home.

“Adoption of bitcoin as legal tender raises a number of macroeconomic, financial, and legal issues that require very careful analysis,” said Gerry Rice, an IMF spokesman, during a scheduled press briefing.

“We are following developments closely, and we’ll continue our consultations with the authorities.”

Rice said the Fund will later on Thursday meet with Bukele to discuss the bitcoin law. El Salvador is in discussions with the IMF seeking a near $1 billion program.

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El Salvador’s law means bitcoin will have equal footing with the dollar, which became its official currency 20 years ago.

Notably, the US dollar continues as legal tender, and the use of Bitcoin will be optional. "The government will guarantee the convertibility to the exact value in dollars at the moment of each transaction," Nayib Bukele said.
Reuters
first published: Jun 10, 2021 10:42 pm

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