IMF Report On El Salvador Is Positive… Except For Everything Bitcoin-Related

Recent IMF reports praise El Salvador for its handling of COVID-19 and declares that the country’s economy has grown 10% since 2021. The International Monetary Fund also recognizes El Salvador’s government efforts to reduce crime, “diversify the energy matrix, foster economic diversification, and enhance financial inclusion.” However, when it comes to Bitcoin, the IMF is completely against it. And they ought to. Because Bitcoin makes them obsolete.

But first, about the report titled “El Salvador: The Staff Concluding Declaration of the 2021 Art IV Mission

“A Concluding Statement describes the preliminary findings of IMF staff at the end of an official staff visit (or ‘mission’), in most cases to a member country. Missions are undertaken as part of regular (usually annual) consultations under Article IV of the IMF’s Articles of Agreement.”

Anyway, let’s go to the IMF’s wacky opinions about Bitcoin.

BTCUSD price chart for 11/23/2021 - TradingView

BTC Price Chart for Oanda, 11/23/2021 | Source: BTC/USD on

IMF’s View of Bitcoin Legal Tender:

After praising El Salvador’s efforts to foster “financial inclusion and raise growth,” the IMF attacks the very tool that the country’s government is using to accomplish that.

“Given Bitcoin’s high price volatility, its use as a legal tender entails significant risks to consumer protection, financial integrity, and financial stability. Additionally, it can lead to financial contingent liabilities. These risks make Bitcoin a bad choice for legal tender. Staff recommends narrowing the scope of the Bitcoin law and urges strengthening the regulation and supervision of the new payment ecosystem.”

Translation: The IMF can’t even think of one good reason for Bitcoin not to be legal tender. One Bitcoin equals one Bitcoin. The cryptocurrency’s volatility is intrinsically related to the assets we compare it with. The US Dollar is the most common. It’s also important to remember that Bitcoin is legal tender in El Salvador ALONGSIDE the US Dollar. If people don’t want volatility, they can easily exchange all of their money into US Dollars. 

The IMF also conveniently ignores the fact that Bitcoin’s volatility can bring positive results for its users. Their other option is the US Dollar. It’s going through an inflationary period like none other. The US government printing more money gives its citizens certain benefits. But El Salvador doesn’t. A Dollarized country that’s not in control of the money printer gets its purchasing power decreased by relentless inflation, but doesn’t get the airdrops and inorganic money artificially stimulating the economy.

Is There Any Other Advice from The IMF?

Yes, they do. After praising financial inclusion, the IMF recommends implementing the exact same measures that keep 70% of El Salvador’s population out of the financial system.

“Stronger regulation and oversight of the new payment ecosystem should be immediately implemented for consumer protection, anti-money laundering and counter financing of terrorism (AML/CFT), and risk management.”

Why are people in El Salvador unbanked? Do they think it’s by choice? Is the IMF aware of their inefficient, outdated procedures that are creating the bottleneck? They are motivated to skip KYC and AML procedures. They can do it easily. Normal people can’t produce all those documents. Banks find it difficult to acquire new clients because of the high cost of all this data processing. It is difficult to offer services for the low-income.

“Recently announced plans to use the proceeds of new sovereign bond issuances to invest in Bitcoin, and the implications of trading more broadly in Bitcoin, will require a very careful analysis of implications for, and potential risks to, financial stability.”

Translation: What’s all this about A Bitcoin City?!!!!! And they’re Building a pet hospital?! ALERT! ALERT!

Relationships with El Salvador are being halted by the United States

This is semi-related news Reuters Informs that U.S. Chargé d’Affaires Jean Manes said in local TV that relationships between the two countries are on hold. “Obviously we’re on a bit of a pause because the government of El Salvador is not giving a signal that it has an interest in our relationship,” she said. “On behalf of the White House, the State Department, we’ve offered a bridge, and the (Salvadoran) government decided not to take it. As far as we’re concerned, we’re interested in having the best relationship with El Salvador.”

Sure, Manes. This sounds completely plausible. There is nothing suspicious.

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