The International Monetary Fund (IMF) has reiterated its advice for El Salvador to limit the scope of its bitcoin legislation. During a press briefing, Julie Kozack, the IMF's director of communications, emphasized the importance of addressing the risks associated with bitcoin.
Kozack stated, "Addressing risks arising from Bitcoin is a key element of these discussions." The IMF has proposed a narrowing of the bitcoin law, strengthening the regulatory framework, and limiting public sector exposure to the cryptocurrency.
The IMF aims to establish a new program that supports macroeconomic stabilization and growth-enhancing reforms in El Salvador. This follows an August statement addressing the country's fiscal challenges, with bitcoin being a significant factor in the negotiations.
El Salvador implemented its bitcoin law in September 2021, becoming the first nation to recognize bitcoin as legal tender. The IMF continues to work with Salvadoran authorities to explore policies that can stabilize the economy while managing risks associated with bitcoin.
The IMF noted that while many risks related to bitcoin have not yet materialized, there is a mutual recognition of the need for further discussions to enhance transparency and mitigate potential fiscal risks. President Nayib Bukele has acknowledged mixed results from the bitcoin experiment, highlighting limited domestic adoption but considering it a net positive for the country.
