The International Monetary Fund (IMF) warns that some of the consequences of a country adopting Bitcoin as its national currency “could be dire.” In this case, will you refer to the Bitcoin Law of El Salvador?
Specifically, its renowned economists Tobías Adrian and Rhoda Weeks-Brown, argued that the widespread adoption of Bitcoin could lead to macroeconomic instability.
«A cryptocurrency like Bitcoin can become fashionable in countries without inflation and stable exchange rates. And provide the unbanked with the means to make payments. However, the cost to your economy could be significant».
They also believe that companies would have to spend significant resources to integrate a cryptocurrency. Instead of focusing on “productive” things.
Indeed, in this blog it is clear that the IMF warns about the risks of adopting Bitcoin as legal tender. Incidentally, IMFBlog is a forum for the opinions of International Monetary Fund (IMF) staff and officials on pressing economic and political issues of the moment.
As a curious fact, although the position is official, it does not mention specific countries.
Risks of Bitcoin adoption
After all, the adoption of Bitcoin can cause prices to fluctuate. Due to the high level of volatility of the cryptocurrency.
With this intention, Tobías Adrian, director of the IMF’s money and capital markets department and Rhoda Weeks-Brown, general counsel and director of the legal department, also point out widespread crimes and fraud in the cryptocurrency market.
«Households and businesses can lose wealth through large changes in value, fraud, or cyberattacks. Although the technology underlying crypto assets has proven to be extremely robust, technical failures can occur. In the case of Bitcoin, the recourse is difficult, because there is no legal issuer».
In fact, Tobías Adrian and Rhoda Weeks-Brown alleged that countries that adopt cryptocurrencies as national currencies or that “grant crypto assets the status of legal tender.” They run the risk of domestic prices becoming very unstable.
Also, that the assets are used in a manner contrary to what is dictated by the measures against money laundering and the financing of terrorism. Likewise, of having problems related to macroeconomic stability and the environment.
In particular, while the blog post does not specifically refer to El Salvador, Adrian and Weeks-Brown said that converting any cryptocurrency into a national currency “is an inadvisable shortcut” to more inclusive financial services.
El Salvador the first country to adopt BTC
To remember, El Salvador became the first country to adopt BTC as its official currency alongside the US dollar. However, the International Monetary Fund (IMF), which is negotiating a $ 1 billion loan for El Salvador, was quick to criticize the move.
In this regard, the president Nayib bukele has promoted its use because of its potential to help Salvadorans living abroad send remittances home.
By the way, Gerry Rice, IMF spokesman, said: ‘The adoption of Bitcoin as legal tender raises a number of macroeconomic questions. In addition, financial and legal that require a very careful analysis. We are closely monitoring developments and will continue our consultations with the authorities».
In closing, what really bothers the IMF? Leave your opinion in the comment box.
I retire with this phrase by Paulo Coelho: «When someone wants something, they must know that they are taking risks. And that’s why life is worth it».