3 ms·

Why does the IMF care what denomination they use domestically?

• georgeecollins 2y ago
  They care about the economic stability of a country they make loans to. Their loans often come with conditions about how the government can run fiscal or trade policy. I don't know if that is good or bad but I have heard smart economists argue both sides.
  • hammock 2y ago
    Sounds reasonable. Which countries got better after the IMF got involved?
    • bbbbq 2y ago
      There's a lot of information about the IMF online.
• akoboldfrying 2y ago
  It's reasonable when you think about it from a risk assessment point of view. The IMF wants to feel that El Salvador (a) will likely be able repay the debt, (b) in a currency that is unlikely to devalue too much. For that reason, the debt would probably be in USD or some other prominent world currency (letting the debt be in El Salvador's local currency would risk them printing money to devalue it, threatening (b)). So the IMF would probably make the debt in USD. In theory, bitcoin can be exchanged for USD, so in theory, El Salvador could exchange some of their bitcoin into USD to pay the IMF back. But what if bitcoin's value drops precipitously? Or if it becomes illiquid? It seems the IMF thinks bitcoin is hype, so it expects its value to drop to near zero eventually. That would make it very difficult for a country that has large bitcoin reserves (instead of large reserves of a more stable currency) to repay the loan.
• bbbbq 2y ago
  [flagged]