Latam Insights Encore: El Salvador Forges a Path to Overcome IMF's Bitcoin-Phobia

Welcome to Latam Insights Encore, a deep dive into Latin America’s most relevant economic and cryptocurrency-based news from last week. In this edition, we discuss the possibilities that El Salvador is opening for other countries to receive help from international institutions like the IMF, even when adopting Bitcoin as a legal tender.
Latam Insights Encore: El Salvador Trailblazes IMF Deal Despite Bitcoin Allegiance
El Salvador, the first country to adopt Bitcoin as legal tender, has become a pioneer in many processes for a country going against the dollar hegemony. Last week, the International Monetary Fund (IMF) reported that a mission had advanced in talks to review the relationship with the Salvadoran government, compromising on a plan that seeks to “strengthen public finances, boost bank reserve buffers, improve governance and transparency.”
This approach might seem surprising given the first reactions of the institution to El Salvador’s adoption of Bitcoin as legal tender back in 2021. The IMF outright called El Salvador to drop bitcoin as legal tender in 20222, stating that “[cryptocurrencies] could soon pose risks to financial stability, especially in countries with widespread crypto adoption.”
However, President Bukele’s government rejected this idea, staying strong in the face of closing the possibility of obtaining funding through conventional channels.
Opposing the IMF, El Salvador’s Finance Minister Alejandro Zelaya declared: “No international organization is going to make us do anything, anything at all. Countries are sovereign nations and they take sovereign decisions about public policy.”
This stance would come at a cost, as the media indicated that bitcoin was hindering El Salvador’s credit opportunities with the IMF. Bukele’s administration is seeking approval for a $1.4 billion credit line to expedite debt payments and other expenses.
Recent discussions seem to indicate that the IMF is softening its stance on bitcoin, perhaps due to the position that the cryptocurrency has reached in world markets as an institutionalized investment tool.
This might also have another effect on the institution, which is facing a future where bitcoin will be coveted by governments as a valuable reserve resource. Eventually, following its bitcoin-phobia of old, the institution will face oblivion and become irrelevant, being substituted for other far more useful and modern institutions. So, this move might be focused on self-preservation, hinting at the possibility of evolving to adapt to a bitcoin-centric world.
If this finally happens, it would be another step to combining traditional finance and cryptocurrency adoption at an international level.

What do you think about the softening of IMF’s stance on bitcoin? Tell us in the comments section below.