The International Monetary Fund (IMF) and El Salvador are moving toward an agreement to mitigate the risks associated with adopting Bitcoin as legal tender. The talks, which focus on strengthening public finances and financial stability, could lead to an IMF-backed program.
Towards a consensus on the regulation of Bitcoin
Discussions between the IMF and the Salvadoran authorities focus on policies aimed at consolidating the country's public finances.
According to a communicated from the IMF ” Progress was made in negotiations for a Fund-supported program focusing on policies to strengthen public finances, increase bank reserves, improve governance and transparency, and mitigate risks related to Bitcoin.. »
The negotiations focus on several key areas. First, improving public finances, with an ambitious target of increasing the primary balance by 3.5% of GDP over three years.
Then, the strengthening of bank reserves to guarantee the stability of the financial system. Finally, the improvement of governance and transparency, particularly concerning the use of Bitcoin.
The IMF acknowledges that the potential risks associated with Bitcoin “have not yet materialized.” However, the institution maintains its reservations about the use of BTC as legal tender. It stresses the need for further efforts to “improve transparency and mitigate potential risks.”
El Salvador's Commitment to Bitcoin
Since President Nayib Bukele adopted Bitcoin as legal tender in 2021, El Salvador has been pursuing an aggressive accumulation strategy. According to the official tracking system, the country currently holds 5,834 bitcoins, valued at around $323 million. However, rumors suggest that these reserves could be much larger.
Despite the IMF’s warnings, El Salvador is sticking to its pro-Bitcoin strategy. The country continues to buy 1 BTC daily, even during market downturns. The “Bitcoin City” project, a city entirely dedicated to crypto, remains relevant and symbolizes the government’s strong commitment to this technology.
Bitcoin adoption among the population appears to be growing, with 12% of Salvadorans reporting that they will use it for everyday purchases in 2023. This figure, while modest, indicates some appropriation of crypto by citizens.
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