Former head of the Central Bank of El Salvador: the legalization of bitcoin “killed” relations with the IMF

Former head of the Central Bank of El Salvador: the legalization of bitcoin “killed” relations with the IMF

El Salvador has been unable to find common ground with the International Monetary Fund (IMF), and negotiations with it are “practically dead.” This opinion was expressed by the former head of the country’s central bank, Carlos Acevedo, writes

We are talking about an agreement with the IMF on the allocation of financial assistance. According to the ex-chairman of the Central Bank, the cryptocurrency initiative cost the country dearly, “killing” relations with the fund.

Acevedo called $1 billion Bitcoin bonds another difficult issue. Initially they planned to release by March 15-20, 2022 with the possibility of an additional issue of $500 million.

Half of the profits from the sale of bitcoin bonds El Salvador was going to send to the development of mining infrastructure on geothermal volcanic energy. The other 50% is for the purchase of digital gold for the government trust.

On March 24, it became known that the authorities postponed issuance in anticipation of more favorable conditions in the global financial market. However, Acevedo attributed the delay to a “lack of investor interest”.

“First they said in January, then in March, then they said that the Digital Assets Law was not ready, then they said that pensions were a priority, now it’s a security issue. I think the government has realized that there is not enough interest in the markets to purchase this issue,” the economist said.

He added that the fall in the price of the first cryptocurrency also does not play in favor of the idea with bonds.

“Over the past six months, bitcoin has fallen by about 35%, and this is not conducive to creating a favorable climate for placement,” Acevedo said.

Law legalizing the first cryptocurrency in El Salvador It entered into force September 7, 2021. the IMF has repeatedly criticized decision of the authorities of the country, and in January recommended deprive bitcoin of the status of legal tender.

Formerly Moody’s downgraded long-term credit rating of El Salvador in foreign currency up to Caa1 with a negative outlook. In early 2022, the firm’s experts noted that purchases BTC government put further pressure on the level of credit confidence in the country.

Recall that at the end of January, Tobias Adrian, Director of the IMF Monetary Policy and Capital Markets Department, said that the volatility of cryptocurrencies destabilizes capital flows in emerging markets.

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