El Salvador’s pressure on bitcoin carries risks, says IMF Executive Director

El Salvador’s decision to create Bitcoin as a legal tender tool would create significant risks for the Central American country, said Kristalina Georgieva, executive director of the International Monetary Fund (IMF).

Georgieva says that accepting Salvadoran bitcoin as a currency, October, among other risks, will create uncertainty in financial planning for households, businesses and at the national level.

 
“Let me start by saying that this is a sovereign decision. A sovereign decision is not automatically a very good one, because what it brings to El Salvador is a very volatile asset that serves as its currency. And the risks that this entails are visible to the naked eye.

And, how do we know we collect it as a tax when bitcoin goes up and bitcoin goes down? How do we plan expenses? Remember, in April, bitcoin passed the $ 65,000 mark and nearly doubled. This is a problem that the finance ministry is struggling with. This is not easy.

Second, How do people plan for individual consumers or suppliers who have to sell goods and services in these volatile assets?

And Third-those who know me know that I care a lot about the environment. One of bitcoin’s problems is that bitcoin mining is very energy intensive.”

Georgieva also says it is difficult to pay from an asset.

“It’s hard to tender an asset. And what we care about is efficient, efficient, reliable payment systems.”

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