{"id":403744,"date":"2022-02-05T19:01:00","date_gmt":"2022-02-05T16:01:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/does-the-imf-have-a-hidden-script-for-el-salvadors-bitcoin-play\/"},"modified":"2022-02-05T19:01:00","modified_gmt":"2022-02-05T16:01:00","slug":"does-the-imf-have-a-hidden-script-for-el-salvadors-bitcoin-play","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/does-the-imf-have-a-hidden-script-for-el-salvadors-bitcoin-play\/","title":{"rendered":"# Does the IMF have a hidden script for El Salvador\u2019s Bitcoin play?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a24093bf1c74\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a24093bf1c74\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/does-the-imf-have-a-hidden-script-for-el-salvadors-bitcoin-play\/#Other_motives\" >Other motives<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/does-the-imf-have-a-hidden-script-for-el-salvadors-bitcoin-play\/#Pioneer_or_renegade\" >Pioneer or renegade<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/does-the-imf-have-a-hidden-script-for-el-salvadors-bitcoin-play\/#An_84_adoption_rate\" >An 84% adoption rate?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/does-the-imf-have-a-hidden-script-for-el-salvadors-bitcoin-play\/#A_hidden_agenda\" >A hidden agenda?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/buradabiliyorum.com\/en\/does-the-imf-have-a-hidden-script-for-el-salvadors-bitcoin-play\/#Reading_the_future\" >Reading the future<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># Does the IMF have a hidden <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">script<\/a> for El Salvador\u2019s Bitcoin play? <\/strong>&#8221;<br \/>\n<img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjItMDIvNmM2NzdkMmMtMmQwMS00YWNjLWIyZmUtMGFlNWJmMTY0Y2RhLmpwZw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-128018ef>On Jan. 25, the International Monetary Fund\u2019s (IMF) directors asked El Salvador to \u201cnarrow the scope\u201d of its Bitcoin Law by \u201cremoving Bitcoin\u2019s legal tender status.\u201d Adopting a cryptocurrency as the Central American country has done \u201centails large risks for financial and market integrity, financial stability and consumer protection,\u201d the fund <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.nytimes.com\/2022\/01\/26\/business\/bitcoin-el-salvador.html\" data-amp=\"https:\/\/www-nytimes-com.cdn.ampproject.org\/c\/s\/www.nytimes.com\/2022\/01\/26\/business\/bitcoin-el-salvador.amp.html\">wrote<\/a>.<\/p>\n<p>Why did the IMF ask El Salvador to effectively pull the plug on its cryptocurrency experiment? Surely this small country \u2014 ranked 104th globally in gross domestic product (GDP) \u2014 is no threat to the international bank\u2019s balance sheet. Moreover, 70% of El Salvador\u2019s populace is unbanked, and one-fifth of its GDP is from United States remittances. Arguably, it could profit from Bitcoin\u2019s (BTC) use. <\/p>\n<p>Then again, it\u2019s only been half a year since El Salvador declared Bitcoin legal tender \u2014 the world\u2019s first nation to do so. Is that really enough time to draw any useful conclusions?<\/p>\n<p>One objective of the IMF is \u201cto ensure exchange [rate] stability,\u201d Gavin Brown, associate professor in financial <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/technology\/\" data-internallinksmanager029f6b8e52c=\"4\" title=\"Technology\" target=\"_blank\" rel=\"noopener\">technology<\/a> at the University of Liverpool, told Cointelegraph. Bitcoin and cryptocurrencies <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/general\/\" data-internallinksmanager029f6b8e52c=\"3\" title=\"General\" target=\"_blank\" rel=\"noopener\">general<\/a>ly have exhibited extreme volatility, evident in the recent 50% drawdown from November\u2019s record market prices. \u201cThis clearly gives a mandate for the IMF to be at best cautious of volatile monetary alternatives such as Bitcoin.\u201d<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Other_motives\"><\/span>Other motives<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>But that may not be the whole story. \u201cThe material impact of such a nation pivoting toward Bitcoin as they have done is in itself not a big deal,\u201d Brown continued. \u201cHowever, what is important is the signal that this sends to other nations should they [El Salvador] make a success of it.\u201d<\/p>\n<p>After all, more than 65 countries presently peg their currencies to the U.S. dollar, Brown noted. \u201cThis, along with the dollarization of oil and the strength of the U.S. economy, has ensured the primacy of the dollar.\u201d Bitcoin and, by extension, El Salvador are not yet a direct threat to this. \u201cBut the keyword there is \u2018yet.\u2019 Other nations may have their heads turned by Bitcoin and El Salvador as a consequence.\u201d<\/p>\n<p>Others were unsurprised that the IMF was asking the country to scrap its legal tender experiment. \u201cIt does not surprise me that the IMF is making this request of El Salvador for multiple reasons,\u201d David Tawil, president and co-founder of ProChain Capital, told Cointelegraph.\u00a0<\/p>\n<p>As the world\u2019s lender of last resort to sovereign nations, the IMF is looking to have fewer, not more, borrowers, said Tawil. Then, too, El Salvador doesn\u2019t have a particularly sterling record with the IMF and capital markets generally. But there might be something more self-serving behind it, too, he suggested, adding:\u00a0<\/p>\n<blockquote><p>\u201cIt is possible that if Bitcoin becomes a strong worldwide reserve currency, the IMF may be deemed a lot less effective and necessary.\u201d<\/p><\/blockquote>\n<p>Moreover, the risks listed in the fund\u2019s Jan. 25 statement, including financial stability, do \u201cnot seem to be a compelling enough reason, given there is very little evidence of the widespread use of Bitcoin for day-to-day transactions in El Salvador,\u201d Syed Rahman, a partner at law firm Rahman Ravelli, told Cointelegraph.<\/p>\n<p>What spurred the fund to action then? \u201cThe IMF is clearly reacting to the recent volatility within the markets,\u201d said Rahman. Given the price retrenchment and apparent drop in investor demand for BTC, \u201cit\u2019s not clear whether the current structure is attracting a recurrent source of liquidity\u201d in the IMF\u2019s mind.\u00a0<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Pioneer_or_renegade\"><\/span>Pioneer or renegade<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>But maybe the IMF knows whereof it speaks. What if Salvadoran President Nayib Bukele is more stumbler than seer, and his nation\u2019s grand experiment is just a giant bungle?<\/p>\n<p>\u201cEl Salvador\u2019s experiment hasn\u2019t gone very well,\u201d acknowledged Tawil. Technical problems have emerged, and Bitcoin\u2019s recent market price drop hasn\u2019t helped. \u201cEl Salvador is not a poster child for a strong and thriving economy. So, it was never likely that there was going to be a long line of followers behind El Salvador.\u201d<\/p>\n<p>\u201cI don\u2019t see any evidence that the Bitcoin adoption has been a success,\u201d John Hawkins, senior lecturer at Canberra School of Politics, Economics and Society, University of Canberra, told Cointelegraph, \u201cso I think it\u2019s unlikely that many, if any, countries will follow.\u201d\u00a0<\/p>\n<p>One possible exception could be countries where hyperinflation has led to a loss of confidence in the national currency such as Venezuela, Hawkins added, \u201cbut even there, dollarization or a currency board would be a better option\u201d than adopting Bitcoin.\u00a0<\/p>\n<p>Nor has there been any surge in foreign investment in El Salvador since September when BTC became legal tender, continued Hawkins. \u201cPresident Bukele promised it would add 25% to El Salvador\u2019s GDP.\u201d That hasn\u2019t happened.\u00a0<\/p>\n<h2><span class=\"ez-toc-section\" id=\"An_84_adoption_rate\"><\/span>An 84% adoption rate?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>On the other hand, an Ark Investment Management <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/research.ark-invest.com\/hubfs\/1_Download_Files_ARK-Invest\/White_Papers\/ARK_BigIdeas2022.pdf\">report<\/a> issued in late January recounted that crypto adoption had soared in the country. \u201cAn estimated 3.8 million people use El Salvador\u2019s Bitcoin wallet, Chivo, suggesting 84% adoption among eligible citizens.\u201d More people now have Bitcoin wallets than traditional bank accounts (1.9 million), the report noted.<\/p>\n<p>Hawkins wasn\u2019t impressed. Salvadorans who followed President Bukele\u2019s advice about holding Bitcoin instead of dollars would have lost a significant proportion of their savings, he told Cointelegraph, adding:<\/p>\n<blockquote><p>\u201cIt\u2019s unsurprising that a lot of people wanted a Chivo wallet, as it came with a free $30. <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> stories suggest many people just withdrew the $30 and have not used the wallet since.\u201d\u00a0<\/p><\/blockquote>\n<p>Ark Investment also noted that Chivo was settling $2 million in remittances daily as of October 2021, \u201caccounting for roughly 12% of El Salvador\u2019s $6 billion in annual remittances and more than 2% of its GDP.\u201d The nation\u2019s Bitcoin play has given its citizens unprecedented financial opportunities, <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/markets.businessinsider.com\/news\/currencies\/el-salvador-president-tweet-dgaf-nayib-bukele-moodys-downgrade-bitcoin-2022-1\" data-amp=\"https:\/\/markets-businessinsider-com.cdn.ampproject.org\/c\/s\/markets.businessinsider.com\/news\/currencies\/el-salvador-president-tweet-dgaf-nayib-bukele-moodys-downgrade-bitcoin-2022-1?amp\">said<\/a> Ark CEO Cathie Wood.<\/p>\n<p>\u201cEl Salvador will hopefully continue with its experiment,\u201d Tawil told Cointelegraph, predicting that it would \u201cachieve slow but important success. And, the price of Bitcoin will rise again.\u201d Indeed, in the long term:\u00a0<\/p>\n<blockquote><p>\u201cEl Salvador may be the most important first mover for the sector.\u201d<\/p><\/blockquote>\n<p>Still, isn\u2019t there a price to pay if El Salvador continues to flout IMF directives? \u201cIt does matter what the IMF says,\u201d Hawkins said. \u201cEven if you do not respect their expertise, El Salvador has been looking for a loan from them.\u201d Dissing the fund and taking actions that the multilateral bank regards as risky just make it harder for El Salvador to get that loan.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"A_hidden_agenda\"><\/span>A hidden agenda?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>What about this notion that the IMF has ulterior motives and that it is simply hostile to cryptocurrencies because they threaten the U.S. dollar and\/or the incumbent global banking system?<\/p>\n<p>\u201cI absolutely agree,\u201d said Tawil. \u201cI think that the IMF is a self-serving agency and is likely as corrupt as other worldwide governing bodies, such as the International Olympic Committee.\u201d<\/p>\n<p>Hawkins differed. \u201cI don\u2019t think the IMF is motivated by protecting banks. They are concerned about the welfare of people in El Salvador and also want El Salvador to be able to repay loans from the IMF.\u201d <\/p>\n<p>The IMF has been taking a \u201crather aggressive approach\u201d to cryptocurrency-related products, commented Rahman, but current volatility is affecting all markets, not just cryptocurrencies. \u201cIt is also worth noting that El Salvador\u2019s relations with the United States have deteriorated, and it could be inferred this is a contributing factor.\u201d<\/p>\n<p>What about the timing of the IMF\u2019s message, why now? The fund has been critical of the El Salvador BTC experiment from the beginning, said Tawil, but \u201cthe current pullback in the price of Bitcoin allows the IMF to scream \u2018I told you so\u2019 and have additional force behind its opinion.\u201d\u00a0<\/p>\n<p>Bukele was notably purchasing more BTC during the most recent crypto drawdown. \u201cMost people go in when the price is up,\u201d he <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/nayibbukele\/status\/1485649494502875137?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1485649494502875137%7Ctwgr%5E%7Ctwcon%5Es1_&amp;ref_url=https%3A%2F%2Fbitcoinist.com%2Fbukeles-el-salvador-23-down-on-bitcoin-investments%2F\">tweeted<\/a> on Jan. 24, \u201cbut the safest and most profitable moment to buy is when the price is down. It\u2019s not rocket <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/sciencee\/\" data-internallinksmanager029f6b8e52c=\"5\" title=\"Science\" target=\"_blank\" rel=\"noopener\">science<\/a>.\u201d\u00a0<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Reading_the_future\"><\/span>Reading the future<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The IMF\u2019s demands to El Salvador on Bitcoin \u201cshows the institution to be on the wrong side of history,\u201d declared deVere CEO Nigel Green in an emailed press release. \u201cThe IMF [is] asking a pioneering sovereign nation to drop a future-focused financial policy that attempts to bring it out of financial instability and a reliance on another country\u2019s currency.\u201d<\/p>\n<p>One shouldn\u2019t forget, either, that the IMF is headquartered in Washington, D.C., that the U.S. is a founding member, and the U.S. is also the largest contributor to the international institution, which has 190 member countries. \u201cThe fortunes and interests of the IMF and the U.S. are, therefore, arguably inextricably linked,\u201d Brown told Cointelegraph.\u00a0<\/p>\n<p><template data-name=\"subscription_form\" data-type=\"law_decoded\"><\/template>\n<\/div>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more News articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/does-the-imf-have-a-hidden-script-for-el-salvador-s-bitcoin-play\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# Does the IMF have a hidden script for El Salvador\u2019s Bitcoin play? &#8221; On Jan. 25, the International Monetary Fund\u2019s (IMF) directors asked El Salvador to \u201cnarrow the scope\u201d of its Bitcoin Law by \u201cremoving Bitcoin\u2019s legal tender status.\u201d Adopting a cryptocurrency as the Central American country has done \u201centails large risks for financial&#8230;<\/p>\n","protected":false},"author":1,"featured_media":403745,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjItMDIvNmM2NzdkMmMtMmQwMS00YWNjLWIyZmUtMGFlNWJmMTY0Y2RhLmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74862,75606,76853,74355,90059,70934],"class_list":["post-403744","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-bitcoin","tag-imf","tag-latin-america","tag-adoption","tag-el-salvador","tag-regulation"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/403744","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=403744"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/403744\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/403745"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=403744"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=403744"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=403744"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}