El Salvador’s Risky Love Affair with Bitcoin Draws Attention from IMF

• The International Monetary Fund (IMF) has warned that El Salvador’s adoption of Bitcoin as legal tender carries certain risks.
• The IMF believes the legal risks, fiscal fragility, and speculative nature of crypto markets should be reconsidered by the authorities.
• The IMF plans to closely monitor El Salvador’s use of Bitcoin in order to ensure transparency and safety.

El Salvador Declares Bitcoin as Legal Tender

In September 2021, El Salvador became the first nation to declare bitcoin as legal tender, allowing businesses within its borders to accept BTC alongside the local fiat currency USD for goods and services. This decision was met with caution from the international community, particularly from the International Monetary Fund (IMF), who were concerned about the potential risks associated with this move.

The IMF’s Warning

In response to El Salvador’s decision, the IMF issued a statement warning that government exposures to bitcoin should be reconsidered given its „legal risks, fiscal fragility, and largely speculative nature“. Despite this warning, El Salvador remains steadfast in their support for bitcoin and is now facing an increase in volatility due to its recent decline from a peak price of $68,000 per unit down to $21,000 at time of writing.

The IMF Will Keep an Eye on El Salvador

Despite expressing concerns over El Salvador’s adoption of bitcoin as legal tender, the IMF has stated that no major issues have arisen yet but they will continue to monitor the situation closely in order to ensure transparency and safety. Furthermore, they predict that tokenized bonds based on bitcoin may emerge in the near future due to how heavily regulated it has become in this country.

Bitcoin Price Fluctuations

The rapid fluctuations in value of BTC during this period have had a significant impact on El Salvador’s economy which is already burdened with limited resources. Many experts believe that these fluctuations could potentially lead to a sharp decline if proper precautions are not taken by authorities in order to protect citizens from any potential losses incurred from investing or using digital assets such as bitcoin.


While it remains uncertain whether or not El Salvadors dedication towards BTC will pay off in terms of economic growth or stability over time however one thing is for certain -the International Monetary Fund will continue watching closely and voicing their opinion regarding any changes or updates pertaining to this matter.