- After the IMF warned El Salvador to reverse the decision to convert Bitcoin into legal tender, the Italian deputy Davide Zanichelli reminded the IMF that El Salvador is, above all, a sovereign state.
- Davide Zanichelli is a deputy and coordinator of the parliamentary intergroup on digital assets and blockchain in Italy.
- The IMF’s concern about using Bitcoin as legal tender comes from the high degree of volatility that the asset possesses.
Digital assets have become an investment, albeit risky, profitable, which is why several countries have considered the possibility of including them in their respective economies, especially after El Salvador ventured to accept Bitcoin as a legal tender.
With this change, from that moment any establishment or business has the obligation to accept the so-called “digital gold” as a form of payment, while buyers can use it and store it as a reserve of value (hodl).
However, that decision has brought repercussions to the nation led by Nayib Bukele, one of the most recent being the exhortation of the International Monetary Fund (IMF)to reverse the decision to convert Bitcoin into legal tender, because its adoption generates “serious” risks for the country, such as the difficulty of obtaining a loan from the agency.
Italy in favor of El Salvador
However, the decision of the Latin American country has the support of other latitudes, since the Italian deputy, and coordinator of the parliamentary intergroup on digital assets and blockchain, Davide Zanichelli, reminded the IMF, in case you forgot, that The Savior Like many other nations, it is first and foremost a sovereign state.
According to the Milano Finanza newspaper, the deputy indicated that the Central American nation “is a Sovereign State” for which countries and institutions must respect the decisions that have effect within their borders, such as your choice of legal tender, be it the US dollar, gold, Bitcoin “or Maldives shells”.
The world against El Salvador
It should be noted that this comment is almost unique in the world, especially because on the side of institutions and governments, the adoption of digital assets such as Bitcoin as legal tender has been surrounded by great skepticism, which is why What Bukele has done has not been to the liking of many internationally.
An example of this is the Bank of Englandwhich issued a warning about the risks associated with the volatility of this type of currency. According to the financial institution, an asset that rises and falls in value quickly and constantly runs the risk of being unreliable in the eyes of its citizens, but above all, it can be a factor that severely affects the coffers of the Condition.
IMF concerns
Practically, the concerns mentioned by the Bank of England are the same ones issued by the International Monetary Fund. Regarding your comment, The IMF carried out an analysis of the economic conditions in El Salvador after the coronavirus health crisis.
According to what was compiled by the aforementioned report, Bukele’s nation is among those that have been least affected in terms of deaths and number of infections, however, its economy has been affected like that of other nations. .
El Salvador, like other countries, is in a recovery stage. Nevertheless, what keeps the IMF in a state of concern is the status of Satoshi Nakamoto’s asset as legal tender, since it has a high degree of volatilityand therefore, the risks that El Salvador ventures to take could affect the financial system.
Experts have indicated that what Bukele promised simply cannot be carried out and therefore is not sustainable, since the conversion costs of the virtual currency depending on the exchange, have left aside the supposed savings that could be obtained by the adoption. of the crypto asset.
In fact, according to analysts, El Salvador must report losses for having acquired Bitcoins, since the asset registered a price reduction by half since November of last year, which means that everything invested by President Bukele has been worn out, despite having bought bitcoins during his falls.
However, Bukele has not taken his finger off the line and continues to reaffirm that the establishment of Bitcoin as a currency for legal use is the correct path.
“There are currently more than $50 million millionaires around the planet. Imagine the situation when each of them, at some point, decides that it is a good option to have at least ONE #Bitcoin in their accounts, it is at this moment that an obvious problem will arise, since there are only 21 million #Bitcoin. Not enough for half of them. A gigantic price increase is only a matter of time”Bukele indicated in Twitter.
You might be interested in: