El Salvador Fires Angry Retort Over IMF Bitcoin Request

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  • El Salvador Treasury Minister Alejandro Zelaya has rejected the IMF’s call to scrap Bitcoin
  • The IMF had called on El Salvador to dissolve its $150 million Bitcoin treasury and remove its status as legal tender
  • Zelaya told the IMF that it was the country’s decision what to do with its money

El Salvador has responded angrily to the International Monetary Fund’s (IMF) request that it abandon its use of Bitcoin as legal tender. Last week the IMF warned the country that in allowing Bitcoin to be treated the same way as the U.S. dollar it risked losing the economical and social stability offered by fiat currencies, but El Salvador Treasury Minister Alejandro Zelaya yesterday essentially told the IMF to butt out.

IMF Warned El Salvador Over Bitcoin Risks

The IMF last week urged El Salvador to cease treating Bitcoin as a sovereign currency and dissolve the $150 million trust fund it created at the time, returning any unused funds to its treasury. The rationale behind this was a familiar one – Bitcoin’s risks to “financial stability, financial integrity, and consumer protection”.

Tobias Adrian, the IMF’s financial counsellor and head of its monetary and capital markets department, yesterday told the Financial Times that the use of cryptocurrencies in place of traditional currencies poses “immediate and acute risks” to emerging markets.

El Salvador Treasury Minister Fires Back

This request, which comes months after the IMF rejected an approach by El Salvador for a $1.3 billion loan, has been met with short shrift by the El Salvadoran authorities. Speaking to local television yesterday, Zelaya told the IMF that “no international organization is going to make us do anything, anything at all” before adding that “Countries are sovereign nations and they take sovereign decisions about public policy.”

This rebuttal kills any hope the IMF had that El Salvador might take its appeal to heart and illustrates the disdain in which the country now seems to hold the world’s political money men.