coinculture.com
El Salvador’s adoption of Bitcoin has yet to realise any anticipated risks. However, greater openness and attention are still required, according to a statement issued by the International Monetary Fund (IMF) after a February 10 visit to the country.
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El Salvador paid $600 million in bonds last month, which preceded the IMF’s “article IV” visit to the nation between January 30 and February 8.
El Salvador: Staff Concluding Statement of the 2023 Article IV Mission. Source: IMF
The visit was the third by the IMG since September 2021, when El Salvador made Bitcoin legal tender. The IMF emphasised that while it does not agree with El Salvador’s use of Bitcoin as a legal tender, some of the most significant concerns have thus far been averted.
However, though some of the original concerns associated with El Salvador’s adoption of Bitcoin have not materialised, it would be unreasonable for the Latin American nation to continue pursuing a policy of monetary independence while not having its currency. Previously, it relied solely on the U.S. dollar as legal tender.
All of this occurred when the El Salvadoran Congress enacted a bill on January 11 regulating the issuance of digital assets by governmental and commercial enterprises. The bill permits the state to offer government bonds backed by Bitcoin, a strategy that the IMF warns against.
In addition, El Salvador intends to use these bonds to construct a “Bitcoin City” connected to a nearby volcano with the idea of exploiting the energy from the volcano to mine pure Bitcoin.
However, since Bukele’s government accepted Bitcoin as legal tender and first purchased a few hundred Bitcoin in September 2021, the entire value of the country’s Bitcoin holdings has decreased by 57% from its all-time high.
Despite these worries, the IMF lauded El Salvador’s “full recovery” to pre-pandemic levels in its February 10 report. The IMF forecasts that the country’s real GDP will increase by 2.4% in 2023, above the average growth rate of the past.