El Salvador and the softer approach of the IMF towards Bitcoin and crypto
El Salvador seems to be making even the International Monetary Fund (IMF) “soften” towards Bitcoin and the crypto market.
In practice, the country with Bitcoin as legal tender since September 2021, is increasingly becoming a pioneer in various processes against the hegemony of the dollar.
To testify to this is the report of the IMF which states that there have been progress in the discussion with the government of El Salvador. Here is how the document quotes:
“Progress has been made in the negotiations for the definition of a program supported by the Fund, focused on policies aimed at strengthening public finances, increasing bank reserves, improving governance and transparency, and mitigating risks arising from Bitcoin.”
Not only that, regarding Bitcoin, the FMI then said:
“Regarding Bitcoin, although many of the risks have not yet materialized, the need for further efforts to improve transparency and mitigate potential risks to fiscal and financial stability arising from the Bitcoin project has been recognized. Further discussions are needed in this and other key areas.”
Despite such statements do not speak of total acceptance of the queen of crypto, they do show a more “soft” approach from the IMF on the matter, compared to what was done in the past.
El Salvador and the evolution of the IMF’s approach regarding Bitcoin and crypto
While El Salvador adopted Bitcoin as the country’s legal currency in September 2021, the IMF initially reacted drastically.
And in fact, already in January 2022, the IMF had explicitly requested the removal of BTC and had advised the country to invest in infrastructure and social spending.
However, the advice was not even listened to and the government of Nayib Bukele has always strengthened its position on Bitcoin.
Not only that, also in 2022, the IMF had also accused BTC of playing into the hands of criminals, stating that the most important crypto is used to launder the proceeds of illegal trades.
Coming to the present day, this position against Bitcoin by the IMF has gradually softened also thanks to the acceptance of BTC in the global markets as an institutionalized investment tool.
Just think that from this January 2024, in the USA, spot Bitcoin ETFs have been approved, followed this summer by spot Ethereum ETFs.
Despite this evolution, however, El Salvador is seeking approval for a line of credit of 1.4 billion dollars to accelerate debt payments and other expenses.
The second term of Nayib Bukele
In the meantime, the President of El Salvador Nayib Bukele, was sworn in for his second term last June 2024.
Bukele assures to continue his mission of revolution with Bitcoin and with all the initiatives that put him at the center of the scene. At the same time, Bukele is receiving support from the crypto industry for his leadership, positioning El Salvador as the “world leader country of Bitcoin”.
In fact, Bukele continues to meet important figures from the world of Bitcoin investments, such as the founder of Ark Invest, Cathie Wood. Last May, the two discussed Bitcoin, Artificial Intelligence, and much more.
Wood also stated that thanks to the strategies of El Salvador and Bukele, the GDP of the country could increase by up to 10 times in the next 5 years of his term.
