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If you need to go to the IMF for a loan of ~3% of your GDP to mitigate the risks associated with Bitcoin, well, that's a pretty good sign that adopting Bitcoin

If you need to go to the IMF for a loan of ~3% of your GDP to mitigate the risks associated with Bitcoin, well, that's a pretty good sign that adopting Bitcoin as legal tender was a pretty disastrous failure.

golergka 2y ago
> to mitigate the risks associated with Bitcoin Was that the goal of the loan? How did you come to this conclusion?
- dragonwriter 2y ago
  Its literally stated. in those words, in the upthread excerpt that describes them receiving the loan.
  - epigramx 2y ago
    [flagged]
    - asimpletune 2y ago
      [flagged]
      - dang 2y ago
        Please don't respond to a bad comment by breaking the site guidelines yourself. That only makes things worse. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
        asimpletune 2y ago
        Sorry about that
    - dang 2y ago
      Can you please not post in the flamewar style here, regardless of how wrong another commenter is or you feel they are? https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
  - golergka 2y ago
    1. That's what stated by the IMF, and so far I don't see any reason to believe it's true. 2. That statement refers to government holding bitcoin as reserves. Which has little relation to use of Bitcoin in the country as legal tender.
    - whoknowsidont 2y ago
      >and so far I don't see any reason to believe it's true. Yeah I guess bitcoin is only allowed to go UP everything negative is always false! There's no way that virtual beanie-babies couldn't overcome the evil IMF!
      - bogota 2y ago
        [flagged]
  - Lerc 2y ago
    The target of the funds is not related to bitcoin. "The program is anchored on improving the underlying primary balance by around 3½ percent of GDP over 3 years, to put the ratio of public debt to GDP on a firm downward path after peaking at 85 percent of GDP in 2024. High quality measures, worth 1½ percent of GDP in 2025, already included in the approved budget, will reduce the wage bill, spending on goods and services, and transfers to municipalities. To ensure fiscal sustainability and a further reduction in borrowing costs, reform efforts will center on strengthening the efficiency of the civil service, the viability of the pension system, and revenue mobilization. Fiscal consolidation will be conducted in a manner that strengthens support for the most vulnerable and protects priority public investment." The assessment of their economy seems broadly positive “The Salvadoran economy has steadily expanded since the pandemic, on the back of robust remittances and a remarkable pick-up in tourism, and amid an improved security situation, with climate shocks having only temporary negative effects. Meanwhile, the current account deficit has continued to narrow, and inflation has fallen further – supported also by lower global commodity prices. The fiscal situation continues to improve very gradually, and recent liability management operations have substantially lowered near-term financing needs, in the context of sharply lower sovereign spreads." “Building on this progress, and recognizing El Salvador’s pending macroeconomic and structural challenges, the IMF-supported program aims to strengthen fiscal and external stability and help create the conditions for stronger and more inclusive growth."
pajko 2y ago
The loan was not to mitigate the risk of the Bitcoin. They needed the loan for reasons. The IMF deemed the high involvement in Bitcoin risky for the loan. The IMF text has a "meanwhile": https://www.imf.org/en/News/Articles/2024/12/18/pr-24485-el-salvador-imf-reaches-staff-level-agreement-on-an-eff-arrangement https://www.imf.org/en/News/Articles/2024/12/18/pr-24485-el-...
- napierzaza 2y ago
  [dead]
- refulgentis 2y ago
  [flagged]
  - bogota 2y ago
    [flagged]
    - HaZeust 2y ago
      ... But what's wrong with his take? That's exactly what happened.
  - JBSay 2y ago
    [flagged]
    - ailun 2y ago
      FYI, I assume anyone using the words "stay mad" is actually the mad one. Just a note on your rhetoric, I have no opinion on El Salvador's bitcoins.
  - vanjajaja1 2y ago
    because they started the experiment 20b in debt and have also managed to do a massive crime clean up + survive covid in that time. bitcoin is an overall benefit, but they are burdened but what has been
willmadden 2y ago
What are you talking about? Their Bitcoin holdings more than doubled in value.
- computerdork 2y ago
  Yeah, i really dislike bitcoin, but have to admit, it has been a very profitable investment for a lot of people (and still hasn't completely crashed like expected)... ... although as a form of currency (as opposed to an investment) for El Salvador, it looks like it's a failure
  - lern_too_spel 2y ago
    The risk that IMF would be concerned about is that the value of their holdings could go to 0 overnight by a wallet hack, data loss, an unscrupulous government employee, or the world running out of greater fools.
    - codebolt 2y ago
      Tether collapse is still the big one.
    - computerdork 2y ago
      Yeah, that's my theory too on one reason it hasn't fully crashed (meaning "the world running out of greater fools"). Unlike tulip bulbs or the dot.com crash, bitcoin is a world-wide phenomenon so there is large supply of bitcoin buyers. Yeah, even the dot.com crash was done in the highly regulated US stock market. Also thinking, since it's extremely difficult to regulate, was wondering if some very clever people with huge holdings have formed a cartel and are doing a lot of price manipulation to prevent it from fully collapsing (maybe even during a rise in price, causing it to drop early to prevent a major run up). But that's just a theory.
  - ornornor 2y ago
    It’s around 100k USD apiece, +875% in the last 5y, +340% over last 2y, +130% over last 1y… I’d also qualify this as “not quite crashed yet” I dont know what the future hodls but it’s looking pretty good for bitcoin so far
bogota 2y ago
Where did you draw that conclusion? Because nothing in the article or reality would lead one to believe that.
mike_d 2y ago
> mitigate the risks associated with Bitcoin The IMF gave them 1.4 billion dollars to mitigate the risk of bitcoin to the IMF. A subtle but important difference.
- motorest 2y ago
  > The IMF gave them 1.4 billion dollars to mitigate the risk of bitcoin to the IMF. You need to be functionally illiterate to draw that take from the announcement. Read the thing, be informed. https://www.imf.org/en/News/Articles/2024/12/18/pr-24485-el-salvador-imf-reaches-staff-level-agreement-on-an-eff-arrangement https://www.imf.org/en/News/Articles/2024/12/18/pr-24485-el-...
  - yesfitz 2y ago
    Lenders of money want to get their money back. They try to minimize the number of factors that threaten getting their money back. Those factors are called "risks". El Salvador wants to borrow money. The IMF is willing to lend it, but sees El Salvador's Bitcoin policies as a risk to getting their money back. From the IMF's perspective it is a risk to El Salvador's economy and therefore the repayment of the IMF's loan. ~ You may want to review the Hacker News Guidelines for commenting. Your comment is out of line with a few of them. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
    - motorest 2y ago
      Your reply addresses nothing in my comment. The truth of the matter is that El Salvador reached out to the IMF for funding to address a number of issues listed in the announcement, and the adoption of Bitcoin as a national currency is one of many many topics covered by the deal. Spinning this as "the IMF paid off El Salvador to shut down Bitcoin" is, again, a take born out of functional illiteracy.
motorest 2y ago
> If you need to go to the IMF for a loan of ~3% of your GDP to mitigate the risks associated with Bitcoin, well, that's a pretty good sign that adopting Bitcoin as legal tender was a pretty disastrous failure. In addition, the whole country ditched Bitcoin as a payment system as soon as they cached out their sign on bonus. How is a national currency depicted as a success if no one uses it at all once they cached out the free money? Crypto bros need to stop moving the goal posts they themselves plant arbitrarily and against any reason.

golergka 2y ago

> to mitigate the risks associated with Bitcoin Was that the goal of the loan? How did you come to this conclusion?

dragonwriter 2y ago
Its literally stated. in those words, in the upthread excerpt that describes them receiving the loan.
- epigramx 2y ago
  [flagged]
  - asimpletune 2y ago
    [flagged]
    - dang 2y ago
      Please don't respond to a bad comment by breaking the site guidelines yourself. That only makes things worse. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
      - asimpletune 2y ago
        Sorry about that
  - dang 2y ago
    Can you please not post in the flamewar style here, regardless of how wrong another commenter is or you feel they are? https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- golergka 2y ago
  1. That's what stated by the IMF, and so far I don't see any reason to believe it's true. 2. That statement refers to government holding bitcoin as reserves. Which has little relation to use of Bitcoin in the country as legal tender.
  - whoknowsidont 2y ago
    >and so far I don't see any reason to believe it's true. Yeah I guess bitcoin is only allowed to go UP everything negative is always false! There's no way that virtual beanie-babies couldn't overcome the evil IMF!
    - bogota 2y ago
      [flagged]
- Lerc 2y ago
  The target of the funds is not related to bitcoin. "The program is anchored on improving the underlying primary balance by around 3½ percent of GDP over 3 years, to put the ratio of public debt to GDP on a firm downward path after peaking at 85 percent of GDP in 2024. High quality measures, worth 1½ percent of GDP in 2025, already included in the approved budget, will reduce the wage bill, spending on goods and services, and transfers to municipalities. To ensure fiscal sustainability and a further reduction in borrowing costs, reform efforts will center on strengthening the efficiency of the civil service, the viability of the pension system, and revenue mobilization. Fiscal consolidation will be conducted in a manner that strengthens support for the most vulnerable and protects priority public investment." The assessment of their economy seems broadly positive “The Salvadoran economy has steadily expanded since the pandemic, on the back of robust remittances and a remarkable pick-up in tourism, and amid an improved security situation, with climate shocks having only temporary negative effects. Meanwhile, the current account deficit has continued to narrow, and inflation has fallen further – supported also by lower global commodity prices. The fiscal situation continues to improve very gradually, and recent liability management operations have substantially lowered near-term financing needs, in the context of sharply lower sovereign spreads." “Building on this progress, and recognizing El Salvador’s pending macroeconomic and structural challenges, the IMF-supported program aims to strengthen fiscal and external stability and help create the conditions for stronger and more inclusive growth."

pajko 2y ago

The loan was not to mitigate the risk of the Bitcoin. They needed the loan for reasons. The IMF deemed the high involvement in Bitcoin risky for the loan. The IMF text has a "meanwhile": https://www.imf.org/en/News/Articles/2024/12/18/pr-24485-el-salvador-imf-reaches-staff-level-agreement-on-an-eff-arrangement https://www.imf.org/en/News/Articles/2024/12/18/pr-24485-el-...

napierzaza 2y ago
[dead]
refulgentis 2y ago
[flagged]
- bogota 2y ago
  [flagged]
  - HaZeust 2y ago
    ... But what's wrong with his take? That's exactly what happened.
- JBSay 2y ago
  [flagged]
  - ailun 2y ago
    FYI, I assume anyone using the words "stay mad" is actually the mad one. Just a note on your rhetoric, I have no opinion on El Salvador's bitcoins.
- vanjajaja1 2y ago
  because they started the experiment 20b in debt and have also managed to do a massive crime clean up + survive covid in that time. bitcoin is an overall benefit, but they are burdened but what has been

willmadden 2y ago

What are you talking about? Their Bitcoin holdings more than doubled in value.

computerdork 2y ago
Yeah, i really dislike bitcoin, but have to admit, it has been a very profitable investment for a lot of people (and still hasn't completely crashed like expected)... ... although as a form of currency (as opposed to an investment) for El Salvador, it looks like it's a failure
- lern_too_spel 2y ago
  The risk that IMF would be concerned about is that the value of their holdings could go to 0 overnight by a wallet hack, data loss, an unscrupulous government employee, or the world running out of greater fools.
  - codebolt 2y ago
    Tether collapse is still the big one.
  - computerdork 2y ago
    Yeah, that's my theory too on one reason it hasn't fully crashed (meaning "the world running out of greater fools"). Unlike tulip bulbs or the dot.com crash, bitcoin is a world-wide phenomenon so there is large supply of bitcoin buyers. Yeah, even the dot.com crash was done in the highly regulated US stock market. Also thinking, since it's extremely difficult to regulate, was wondering if some very clever people with huge holdings have formed a cartel and are doing a lot of price manipulation to prevent it from fully collapsing (maybe even during a rise in price, causing it to drop early to prevent a major run up). But that's just a theory.
- ornornor 2y ago
  It’s around 100k USD apiece, +875% in the last 5y, +340% over last 2y, +130% over last 1y… I’d also qualify this as “not quite crashed yet” I dont know what the future hodls but it’s looking pretty good for bitcoin so far

bogota 2y ago

Where did you draw that conclusion? Because nothing in the article or reality would lead one to believe that.

mike_d 2y ago

> mitigate the risks associated with Bitcoin The IMF gave them 1.4 billion dollars to mitigate the risk of bitcoin to the IMF. A subtle but important difference.

motorest 2y ago
> The IMF gave them 1.4 billion dollars to mitigate the risk of bitcoin to the IMF. You need to be functionally illiterate to draw that take from the announcement. Read the thing, be informed. https://www.imf.org/en/News/Articles/2024/12/18/pr-24485-el-salvador-imf-reaches-staff-level-agreement-on-an-eff-arrangement https://www.imf.org/en/News/Articles/2024/12/18/pr-24485-el-...
- yesfitz 2y ago
  Lenders of money want to get their money back. They try to minimize the number of factors that threaten getting their money back. Those factors are called "risks". El Salvador wants to borrow money. The IMF is willing to lend it, but sees El Salvador's Bitcoin policies as a risk to getting their money back. From the IMF's perspective it is a risk to El Salvador's economy and therefore the repayment of the IMF's loan. ~ You may want to review the Hacker News Guidelines for commenting. Your comment is out of line with a few of them. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
  - motorest 2y ago
    Your reply addresses nothing in my comment. The truth of the matter is that El Salvador reached out to the IMF for funding to address a number of issues listed in the announcement, and the adoption of Bitcoin as a national currency is one of many many topics covered by the deal. Spinning this as "the IMF paid off El Salvador to shut down Bitcoin" is, again, a take born out of functional illiteracy.

motorest 2y ago

> If you need to go to the IMF for a loan of ~3% of your GDP to mitigate the risks associated with Bitcoin, well, that's a pretty good sign that adopting Bitcoin as legal tender was a pretty disastrous failure. In addition, the whole country ditched Bitcoin as a payment system as soon as they cached out their sign on bonus. How is a national currency depicted as a success if no one uses it at all once they cached out the free money? Crypto bros need to stop moving the goal posts they themselves plant arbitrarily and against any reason.