El Salvador’s Economic Path Forward: Concessions Made, but Bitcoin Remains a National Currency
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Salvador Makes Concessions to IMF, But Much Remains the Same
Despite announcing significant economic reforms in September 2021, El Salvador is still grappling with the implications of making Bitcoin a legal tender. The International Monetary Fund (IMF) has been critical of the country’s move, citing concerns over volatility and lack of oversight.
In a recent statement, Herbert, an individual holding approximately $596 million worth of Bitcoin, emphasized that many of Salvador’s bitcoin-related projects, including the development of cryptocurrency markets and educational programs, will remain intact. The IMF’s agreement will not affect the legal tender status of Bitcoin in the country.
The IMF had previously expressed concerns over Salvador’s bold move, warning about the significant risks involved with using Bitcoin as a national currency. In 2022, the International Monetary Fund advised that El Salvador was taking on too much risk by embracing Bitcoin, citing its extreme volatility.
However, it appears that recent concessions made to the IMF will not significantly alter the course of action in this regard. Despite this, Herbert’s announcement highlights the country’s commitment to continuing its innovative approach to finance.
It is worth noting that the government initially offered Salvadorans 30 US dollars’ worth of Bitcoin for registering with Chivo, but the program failed to gain traction as expected. According to data from the National Bureau of Economic Research, by mid-2022, more than 60% of eligible individuals had not made a transaction using their registered Bitcoin. A January survey conducted by the Central American University found that an astonishing 88% of respondents did not use Bitcoin at all.
Despite these disappointing results, the government has reportedly received significant funding commitments from international partners. The IMF alone has pledged $1.4 billion as part of the agreement, with additional funds expected from the World Bank, Inter-American Development Bank, and regional development banks, totaling a staggering $3.5 billion.
The author is a financial journalist
Source: http://www.bitcoinbazis.hu
