The government of El Salvador has responded to the International Monetary Fund’s (IMF) recommendation to drop the use of Bitcoin as legal tender, per the Associated Press.
“No international organization is going to make us do anything, anything at all,” Treasury Minister Alejandro Zelaya said, adding on a local television station that Bitcoin as legal tender was an issue of sovereignty for El Salvador.
Zelaya’s response is the latest in a series of spats between the Salvadoran government—led by president and Bitcoin advocate Nayib Bukele—and the IMF.
El Salvador and the IMF
El Salvador’s tense relationship with the IMF began last summer when the international organization said the country’s Bitcoin embrace raised “a number of macroeconomic, financial and legal issues.”
“Crypto assets can pose significant risks and effective regulatory measures are very important when dealing with them,” IMF spokesperson Gerry Rice added.
Despite the IMF’s stance, El Salvador moved ahead with Bukele’s plan to adopt Bitcoin as legal tender—which occurred in September 2021.
As El Salvador entered September 2021, the country’s Congress approved a $150 million fund that was designed to help facilitate transactions between the U.S. Dollar—El Salvador’s other legal tender currency—and Bitcoin.
Once again, the IMF was not impressed.
“Privately issued crypto assets like Bitcoin come with substantial risks. Making them equivalent to a national currency is an inadvisable shortcut,” the IMF tweeted as it reiterated its original position shared earlier in the summer.
Just earlier this month, the IMF raised the El Savador-Bitcoin flag for a third time, arguing that adopting Bitcoin as legal tender “entails large risks for financial and market integrity, financial stability, and consumer protection. It also can create contingent liabilities.”
This third warning came amid fears that El Salvador’s Bitcoin purchases add unwanted risk to the country’s already concerning sovereign credit outlook.