IMF says El Salvador’s Bitcoin adoption could have “dire consequences”

The International Monetary Fund (IMF) has issued a warning to El Salvador about the potentially “dire consequences” of the country's decision to adopt Bitcoin as its national currency.

IMF experts Tobias Adrian and Rhoda Weeks-Brows acknowledged that Bitcoin may have some positive effects, such as allowing people unfamiliar with banking systems access to online transactions.

However, this could come at a significant cost for the economy. One such issue is the difficulty in stabilizing prices, which Weeks-Brows and Adrian believe is a real risk to El Salvador.

Adrian said: “If goods and services were priced in both a real currency and a crypto asset, households and businesses would spend significant time and resources choosing which money to hold as opposed to engaging in productive activities.”

According to the IMF duo, the country's monetary policy would lose its clout internationally and possibly drive high inflation at home, and for digital assets specifically. They cited the fact that Bitcoin has been see-sawing between $30,000 and $65,000 in the past few months.

The pair also commented on the environmental risks of mining Bitcoin, but El Salvador’s President Nayib Bukele said that the country can navigate the higher power demand by tapping into the country's geothermal energy to generate more Bitcoin blocks.

El Salvador is among the pioneers in mass crypto adoption and as such, it would be interesting to see how far it can take this. Skepticism aside, Bitcoin is already used in many day-to-day operations and for recreational purposes worldwide.

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Written by Barney

Co-founder

Barney is co-founder of CryptoGamblingNews.com. When not at work he can usually be found behind a Nikon. He's won numerous international competitions for his photography and volunteers as a content creator for aid organisations in Africa.

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