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Ditch Bitcoin: IMF Urges El Salvador to Rethink Crypto

bitxbitxbitcoin 5y ago
> IMF executive directors, who represent the fund’s 190 member nations, highlighted Bitcoin’s risks to “financial stability, financial integrity, and consumer protection” and fiscal contingent liabilities, the fund said in a statement Tuesday. They urged the authorities “to narrow the scope of the Bitcoin law by removing Bitcoin’s legal tender status.” Sounds like they feel threatened.
- djohnston 5y ago
  The only legitimate problem with Bitcoin is the environmental impact of POW. These folks are clearly threatened by something that could supplant them.
  - codyb 5y ago
    How exactly would Bitcoin supplant the IMF? Are we going to crowdsource billion dollar loans on the ethereum blockchain so retail investors can help poor countries pay off debt?
- chad_stevens 5y ago
  Of course, if people start using another currency then they lose a lot of power. Being able to print your own money is a huge power states have. You won’t be able to print your way out if a crypto takes over, that’s why crypto will never be a thing; unless the state makes a bastardized/spy coin.
  - bubbleRefuge 5y ago
    Is there any way for the government to control the issuance of crypto coins? The Fed has proposed creating a 'digital' dollar . Just not sure if its the same thing as a crypto dollar ?
    - PretzelPirate 5y ago
      The concept of Cryptocurrencies doesn’t prohibit the arbitrary creation of new coins, that’s just an implementation details of most of the popular ones. Even Bitcoin could have allowed for Satoshi to create new coins on a whim, but that wasn’t Satoshi’s goal. A government could create a cryptocurrency where they control inflation.
      - kayamon 5y ago
        Any additional cryptocurrency is already inflation.
        scottiebarnes 5y ago
        That's not the definition of inflation. Inflation is the reduction of buying power via the creation of additional units. Cryptocurrency is a word used to describe a class of assets, each protocol/network being its own asset. Given that cryptocurrency is usually open source and forkable, there are unlimited amount of "currencies". I can literally register 100 domains and fork 100 variations of bitcoin to create 100 new unique projects. That doesn't mean I've inflated anything at all. 1 dogecoin is not 1 bitcoin.
- sudosysgen 5y ago
  The IMF doesn't really care about that. They can loan shark with Bitcoin just as well as with USD or EUR.
freddealmeida 5y ago
The IMF are modern day thugs. Destroying nations through usury.
- NicoJuicy 5y ago
  El Salvador is destroying itself. IMF is just standing by as they ( = El Salvador's president) are the sole ones responsible for the mess and IMF already mentioned that they didn't support this. You are free to help El Salvador that is looking for 1,3 billion $ and have your requests associated with it. https://www.reuters.com/article/us-el-salvador-economy-exclusive-idUSKBN2AW1GV https://www.reuters.com/article/us-el-salvador-economy-exclu... It seems that Bitcoin hype hasn't helped much. Who could have guessed that a countries issues can't be solved by tweeting: "bought the dip" 10 times. If you want your cake, you should eat it too. The real victims are the civilians though, but they also voted for him. Ugh
- unmole 5y ago
  The IMF tends to be the cheapest source of credit for nations that end up needing to borrow with the concessional interest rate being zero. Accusing the IMF of usury is nonsensical.
  - conanbatt 5y ago
    The IMF has imposed policy plans through their leverage on countries knowingly the policy would have adverse effects in their economies and population. This was admitted by Christine Largarde and denounced by Varoufakis in the Greece Debt crisis. In Argentina, the IMF gave a pro-US government unfettered amounts of money to spend politically the face of elections, but with a debt maturity so short (4 years) and an unfeasible economic plan that the country was into default again 2 years later, and is still trying to renegotiate the balance of that debt. The IMF existence is pure moral hazard, and even though Argentina would suffer greatly from default its IMF debt, part of me wants them to suffer the consequences of bad lending as well, for the which they never paid a price for politically or institutionally.
  - scottiebarnes 5y ago
    IMF loans money to dictatorships whom they probably know enough to not trust. Money gets absconded/pocketed away due to corruption. Government gets overthrown. IMF says too bad, you still owe us money. https://www.cadtm.org/World-Bank-and-IMF-support-to-dictatorships https://www.cadtm.org/World-Bank-and-IMF-support-to-dictator... TLDR: there are geopolitics at play, the IMF does not just simply give out loans.
Rebelgecko 5y ago
Has there been any analysis of how the latest cryptocurrency volatility has impacted their economy (if it has at all)? I got a chuckle out of seeing that the mayor of New York has lost thousands of dollars as part of his cryptocurrency salary stunt.
- NicoJuicy 5y ago
  https://foreignpolicy.com/2021/12/06/bitcoin-city-el-salvador-nayib-bukele/ https://foreignpolicy.com/2021/12/06/bitcoin-city-el-salvado... Note : the author is known to be biased against crypto but had good points in general many times. He's also the one I'm observing to see actual research about El Salvador ( eg. From Spanish resources)
- pajko 5y ago
  https://fortune.com/2022/01/19/el-salvador-bitcoin-economy-distressed-debt/ https://fortune.com/2022/01/19/el-salvador-bitcoin-economy-d...
- blablabla123 5y ago
  To be fair non-crypto (financial) Economy is struggling as well.
vmception 5y ago
El Salvador should offer an automated hedging solution for their citizens They can have bitcoin and stable value
ekanes 5y ago
El Salvador’s President is speaking at the biggest BTC conference in April, for the most personal/reputational reasons it’s doubtful he’d/ they’d change course for awhile.
- 650REDHAIR 5y ago
  BTC Miami was a disappointing shitshow last year for anyone who is considering coming to see this speech.
  - ekanes 5y ago
    Thanks that’s useful.
deleted 5y ago
[deleted]
vegai_ 5y ago
Yes, as we all know, you should always buy high and sell low.
jonathan-adly 5y ago
Just a couple of data points: 1. El Salvador still has more gold in its reserves than Bitcoin 2. The bitcoin holdings are less than 2% of its total reserves Hate or love Bitcoin, rationally - the downside is they spent 2% of their treasury on a marketing campaign and got some back through enabling cheap money transfers. To be honest, the IMF is proving its idiocy by making this a big deal.
- NicoJuicy 5y ago
  What are the sources of those "data points"? As far as I can tell, that 2% didn't return anything and even plumbed the rating of their bonds with public funds during a crisis, the reality is they currently need all their money. A lot more is going wrong ofc: Money is disappearing from their chivo wallet - https://mobile.twitter.com/_elcomisionado_/status/1472326380620632064 https://mobile.twitter.com/_elcomisionado_/status/1472326380... Bitcoin fees are subsidized - https://www.elsalvador.com/noticias/negocios/el-salvador-bitcoin-chivo-wallet-bukele-comerciantes/910079/2021/ https://www.elsalvador.com/noticias/negocios/el-salvador-bit... Chivo went down with AWS - https://www.elsalvador.com/noticias/negocios/chivo-wallet-empresa-bukele-amazon/909931/2021/ https://www.elsalvador.com/noticias/negocios/chivo-wallet-em... Chivo is based on mongodb, that doesn't even have data integrity - https://bitcoinist.com/from-the-ground-anita-posch-bitcoin-el-salvador/ https://bitcoinist.com/from-the-ground-anita-posch-bitcoin-e... Bitcoin Remittances are only 5% of the market - https://www.elsalvador.com/noticias/negocios/el-salvador-bitcoin-remesas-familiares-bcr-chivo-wallet/910438/2021/ https://www.elsalvador.com/noticias/negocios/el-salvador-bit... - barely even worth mentioning. They have more than that entire market in BTC holdings. Cabinet is sentenced for corruption - https://www.elsalvador.com/noticias/negocios/chivo-wallet-carolina-recinos-estados-unidos-sanciones-a-funcionarios-de-bukele/908463/2021/ https://www.elsalvador.com/noticias/negocios/chivo-wallet-ca... The money that is brought in, is mostly money laundering and I'm expecting that will have big consequences. Most importantly, remittances are more expensive with Bitcoin! https://qz.com/2058676/remittances-to-el-salvador-are-cheaper-without-using-bitcoin/ https://qz.com/2058676/remittances-to-el-salvador-are-cheape... The continued promotion of buying the new dips of BTC could become a real risk. Ps. Gold reserves are lower than Bitcoin holdings because of the recent Bitcoin drop, lol. ( 79 million in gold) - - https://m.timesofindia.com/business/cryptocurrency/bitcoin/bukele-reveals-el-salvadors-gold-reserves-and-benefits-of-bitcoin-over-gold/articleshow/88142021.cms https://m.timesofindia.com/business/cryptocurrency/bitcoin/b...
malermeister 5y ago
If I were asked to lend $1.3B to somebody who just lost a ton of money on what is effectively gambling, I would also ask them to rethink their gambling habit before giving them more money.

> IMF executive directors, who represent the fund’s 190 member nations, highlighted Bitcoin’s risks to “financial stability, financial integrity, and consumer protection” and fiscal contingent liabilities, the fund said in a statement Tuesday. They urged the authorities “to narrow the scope of the Bitcoin law by removing Bitcoin’s legal tender status.” Sounds like they feel threatened.

djohnston 5y ago
The only legitimate problem with Bitcoin is the environmental impact of POW. These folks are clearly threatened by something that could supplant them.
- codyb 5y ago
  How exactly would Bitcoin supplant the IMF? Are we going to crowdsource billion dollar loans on the ethereum blockchain so retail investors can help poor countries pay off debt?
chad_stevens 5y ago
Of course, if people start using another currency then they lose a lot of power. Being able to print your own money is a huge power states have. You won’t be able to print your way out if a crypto takes over, that’s why crypto will never be a thing; unless the state makes a bastardized/spy coin.
- bubbleRefuge 5y ago
  Is there any way for the government to control the issuance of crypto coins? The Fed has proposed creating a 'digital' dollar . Just not sure if its the same thing as a crypto dollar ?
  - PretzelPirate 5y ago
    The concept of Cryptocurrencies doesn’t prohibit the arbitrary creation of new coins, that’s just an implementation details of most of the popular ones. Even Bitcoin could have allowed for Satoshi to create new coins on a whim, but that wasn’t Satoshi’s goal. A government could create a cryptocurrency where they control inflation.
    - kayamon 5y ago
      Any additional cryptocurrency is already inflation.
      - scottiebarnes 5y ago
        That's not the definition of inflation. Inflation is the reduction of buying power via the creation of additional units. Cryptocurrency is a word used to describe a class of assets, each protocol/network being its own asset. Given that cryptocurrency is usually open source and forkable, there are unlimited amount of "currencies". I can literally register 100 domains and fork 100 variations of bitcoin to create 100 new unique projects. That doesn't mean I've inflated anything at all. 1 dogecoin is not 1 bitcoin.
sudosysgen 5y ago
The IMF doesn't really care about that. They can loan shark with Bitcoin just as well as with USD or EUR.

freddealmeida 5y ago

The IMF are modern day thugs. Destroying nations through usury.

NicoJuicy 5y ago
El Salvador is destroying itself. IMF is just standing by as they ( = El Salvador's president) are the sole ones responsible for the mess and IMF already mentioned that they didn't support this. You are free to help El Salvador that is looking for 1,3 billion $ and have your requests associated with it. https://www.reuters.com/article/us-el-salvador-economy-exclusive-idUSKBN2AW1GV https://www.reuters.com/article/us-el-salvador-economy-exclu... It seems that Bitcoin hype hasn't helped much. Who could have guessed that a countries issues can't be solved by tweeting: "bought the dip" 10 times. If you want your cake, you should eat it too. The real victims are the civilians though, but they also voted for him. Ugh
unmole 5y ago
The IMF tends to be the cheapest source of credit for nations that end up needing to borrow with the concessional interest rate being zero. Accusing the IMF of usury is nonsensical.
- conanbatt 5y ago
  The IMF has imposed policy plans through their leverage on countries knowingly the policy would have adverse effects in their economies and population. This was admitted by Christine Largarde and denounced by Varoufakis in the Greece Debt crisis. In Argentina, the IMF gave a pro-US government unfettered amounts of money to spend politically the face of elections, but with a debt maturity so short (4 years) and an unfeasible economic plan that the country was into default again 2 years later, and is still trying to renegotiate the balance of that debt. The IMF existence is pure moral hazard, and even though Argentina would suffer greatly from default its IMF debt, part of me wants them to suffer the consequences of bad lending as well, for the which they never paid a price for politically or institutionally.
- scottiebarnes 5y ago
  IMF loans money to dictatorships whom they probably know enough to not trust. Money gets absconded/pocketed away due to corruption. Government gets overthrown. IMF says too bad, you still owe us money. https://www.cadtm.org/World-Bank-and-IMF-support-to-dictatorships https://www.cadtm.org/World-Bank-and-IMF-support-to-dictator... TLDR: there are geopolitics at play, the IMF does not just simply give out loans.

Rebelgecko 5y ago

Has there been any analysis of how the latest cryptocurrency volatility has impacted their economy (if it has at all)? I got a chuckle out of seeing that the mayor of New York has lost thousands of dollars as part of his cryptocurrency salary stunt.

NicoJuicy 5y ago
https://foreignpolicy.com/2021/12/06/bitcoin-city-el-salvador-nayib-bukele/ https://foreignpolicy.com/2021/12/06/bitcoin-city-el-salvado... Note : the author is known to be biased against crypto but had good points in general many times. He's also the one I'm observing to see actual research about El Salvador ( eg. From Spanish resources)
pajko 5y ago
https://fortune.com/2022/01/19/el-salvador-bitcoin-economy-distressed-debt/ https://fortune.com/2022/01/19/el-salvador-bitcoin-economy-d...
blablabla123 5y ago
To be fair non-crypto (financial) Economy is struggling as well.

vmception 5y ago

El Salvador should offer an automated hedging solution for their citizens They can have bitcoin and stable value

ekanes 5y ago

El Salvador’s President is speaking at the biggest BTC conference in April, for the most personal/reputational reasons it’s doubtful he’d/ they’d change course for awhile.

650REDHAIR 5y ago
BTC Miami was a disappointing shitshow last year for anyone who is considering coming to see this speech.
- ekanes 5y ago
  Thanks that’s useful.

deleted 5y ago

[deleted]

vegai_ 5y ago

Yes, as we all know, you should always buy high and sell low.

jonathan-adly 5y ago

Just a couple of data points: 1. El Salvador still has more gold in its reserves than Bitcoin 2. The bitcoin holdings are less than 2% of its total reserves Hate or love Bitcoin, rationally - the downside is they spent 2% of their treasury on a marketing campaign and got some back through enabling cheap money transfers. To be honest, the IMF is proving its idiocy by making this a big deal.

NicoJuicy 5y ago
What are the sources of those "data points"? As far as I can tell, that 2% didn't return anything and even plumbed the rating of their bonds with public funds during a crisis, the reality is they currently need all their money. A lot more is going wrong ofc: Money is disappearing from their chivo wallet - https://mobile.twitter.com/_elcomisionado_/status/1472326380620632064 https://mobile.twitter.com/_elcomisionado_/status/1472326380... Bitcoin fees are subsidized - https://www.elsalvador.com/noticias/negocios/el-salvador-bitcoin-chivo-wallet-bukele-comerciantes/910079/2021/ https://www.elsalvador.com/noticias/negocios/el-salvador-bit... Chivo went down with AWS - https://www.elsalvador.com/noticias/negocios/chivo-wallet-empresa-bukele-amazon/909931/2021/ https://www.elsalvador.com/noticias/negocios/chivo-wallet-em... Chivo is based on mongodb, that doesn't even have data integrity - https://bitcoinist.com/from-the-ground-anita-posch-bitcoin-el-salvador/ https://bitcoinist.com/from-the-ground-anita-posch-bitcoin-e... Bitcoin Remittances are only 5% of the market - https://www.elsalvador.com/noticias/negocios/el-salvador-bitcoin-remesas-familiares-bcr-chivo-wallet/910438/2021/ https://www.elsalvador.com/noticias/negocios/el-salvador-bit... - barely even worth mentioning. They have more than that entire market in BTC holdings. Cabinet is sentenced for corruption - https://www.elsalvador.com/noticias/negocios/chivo-wallet-carolina-recinos-estados-unidos-sanciones-a-funcionarios-de-bukele/908463/2021/ https://www.elsalvador.com/noticias/negocios/chivo-wallet-ca... The money that is brought in, is mostly money laundering and I'm expecting that will have big consequences. Most importantly, remittances are more expensive with Bitcoin! https://qz.com/2058676/remittances-to-el-salvador-are-cheaper-without-using-bitcoin/ https://qz.com/2058676/remittances-to-el-salvador-are-cheape... The continued promotion of buying the new dips of BTC could become a real risk. Ps. Gold reserves are lower than Bitcoin holdings because of the recent Bitcoin drop, lol. ( 79 million in gold) - - https://m.timesofindia.com/business/cryptocurrency/bitcoin/bukele-reveals-el-salvadors-gold-reserves-and-benefits-of-bitcoin-over-gold/articleshow/88142021.cms https://m.timesofindia.com/business/cryptocurrency/bitcoin/b...

malermeister 5y ago

If I were asked to lend $1.3B to somebody who just lost a ton of money on what is effectively gambling, I would also ask them to rethink their gambling habit before giving them more money.