El Salvador Takes Swipe At The IMF — President Bukele Predicts Huge Price Gains For Bitcoin

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Bank Of England Governor Worried El Salvador Citizens Will Get Hurt By Bitcoin’s Use As Legal Tender
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  • El Salvador is not going to bend to the IMF’s will.
  • In their most recent report, the IMF expresses similar concerns about volatility and consumer protection as they have in the past.
  • Bukele is expecting a huge rise in Bitcoin value.

El Salvador’s government has responded to the IMF’s most recent report on the country’s adoption of Bitcoin as a legal tender. As per the government’s statement, the government has no plan to comply with the IMF’s recommendations. 

No International Organization Is Going To Tell Us What To Do

The Treasury Minister of El Salvador, Alejandro Zelaya, declared that the government was not going to be strong-armed to do anything. Zelaya disclosed to a local TV station that the country had the exclusive rights to make decisions on its policies. “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,” said the Minister.

In a recent report last week, the international body suggested that El Salvador do away with its Bitcoin trust fund and also return unused funds from the trust back to the nation’s treasury. Similar to its previous reports, the body cited the high price volatility of the asset as well as its use by criminal elements.

Bitcoin’s price dump in the last 3 months, dropping almost 50% compared to its all-time high in early November, almost seems to emphasize the first point. In response to the IMF’s report, Zelaya said that the government was compliant with rules around money laundering. The regulatory body also told the government to stop offering users the $30 incentive to use the government-backed Chivo wallet for Bitcoin transactions.

While the IMF believes that the Chivo wallet holds potential, it is of the opinion that this potential would be maximized by using the US dollar instead of Bitcoin. According to the report, “in the near-term, the actual costs of implementing Chivo and operationalizing the Bitcoin law exceed potential benefits.”

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The El Salvadoran government, however, argues that the Chivo wallet has rapidly improved financial inclusion. Bitcoin tourism was mentioned as an additional benefit of the innovation. For now, El Salvador’s government sees no need to change its stance on Bitcoin. However, it admits that it will continue to do more to ensure consumers are protected.

Bukele Predicts Huge Price Gains For Bitcoin

Amid all of these happenings, after bilateral talks with the IMF, El Salvador’s president, Nayib Bukele, took to Twitter to call for what he termed a “gigantic price increase” for the asset. You will recall that the president has been one of the major proponents of the country’s adoption of Bitcoin as a legal tender.

“There are more than 50 million millionaires in the world. Imagine when each one of them decides they should own at least ONE Bitcoin…But there will ever be only 21 million Bitcoin…No enough for even half of them. A gigantic price increase is just a matter of time.” 

El Salvador became the first country to adopt Bitcoin as a legal tender in 2021. Since then, the country has steadily purchased the asset, growing its reserve to over a thousand bitcoins while working towards its plan to build a Bitcoin City.