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El Salvador Undeterred by IMF, Chooses Bitcoin

El Salvador's Bitcoin move is a sovereign decision, replies its Finance Minister.

IMF’s Interference

El Salvador responds to International Monetary Fund (IMF) recommendation of dropping Bitcoin ($BTC) as its legal tender and to dissolve the $150 million Fidebitcoin trust fund with a firm no. The sovereign state’s Finance Minister, Alejandro Zelaya told a local television station, 

‘No international organization is going to make us do anything, anything at all.’  

The minister adds that countries are sovereign nations that make sovereign decisions about their own policies. El Salvador’s Bitcoin move is an internal affair of a sovereign state on its own monetary policy. This decision should not concern IMF. 

Source: IMF’s 114 page report on El Salvador released on January 28 made several recommendations 

The state’s response was in reply to the report published by IMF. In the report, IMF urges El Salvador to remove Bitcoin as its legal tender. The international organization was of the opinion that crypto technologies should be explored only as an alternative. The country’s law on Bitcoin should crypto transactions strictly voluntary. 


Matter of Perspective

IMF’s uneasiness with El Salvador’s unconventional move is understandable. Bitcoin is disruptive and autonomous. Other nation-states are looking at El Salvador’s move as a test case and if it works, the legacy system will crumble. 

Putting things into perspective, El Salvador is not the first nation to hold Bitcoin as its national reserve. Ark Invest in its latest report, states that 263,037 Bitcoins are held by countries. This may change as crypto assets become mainstream. Nation-states may start making allocation for Bitcoin in exchange for other traditional assets such as gold or silver. 

Source

El Salvador only holds 1,801 Bitcoins as of January 22.The only thing that the country has done differently is to be the first to adopt Bitcoin as its legal tender.  This is a move that sits uneasily with many quarters. 


Bitcoin is Inevitable

Source

Small countries or countries that are unable to contain its inflation will turn to Bitcoin not for future and unproven promises but for its use cases. Bitcoin has proven to be a store of value which is the utility that failing economies are in need of. 

Paraguay and Tonga are other nation-states that have publicly announced that they are considering making the same move as El Salvador. Maybe 2022 is when the dominos will fall. 

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