Two International Monetary Fund (IMF) officials criticize Monday without name and shame that the adoption of Bitcoin as legal tender in some countries would be risky and “could be dire” to its economy.
Per the article published Monday on the IMF blog. The Financial Counsellor and Director of the IMF’s Monetary and Capital Markets Department, Tobias Adrian and General Counsel& Director of the IMF’s legal department Rhoda Weeks-Brown, described the adoption of crypto assets for fiat currencies money “a temptation and shortcut”. They said, “crypto-assets are unlikely to catch on in countries with stable inflation and exchange rates, and credible institutions,”
“Households and businesses would have very little incentive to price or save in a parallel crypto-asset such as Bitcoin, even if it were given legal tender or currency status. Their value is just too volatile and unrelated to the real economy.”
Tobias Adrian and Rhoda Weeks-Brown did not specifically call out the Central American nation El Salvador, which passed the Bitcoin law in June and announced to adopt Bitcoin as legal tender starting from September. Two experts are concerned that crypto-asset would be too fluctuating in terms of volatile domestic prices, especially those imported from trading in terms of the flexible price of Bitcoin.
According to the article, experts believe crypto-assets would require the acceptance by the creditors in payment of monetary obligations, including taxes, currencies (similar to notes and coins) issued by the central bank if the crypto assets are authorized a legal status.
In addition, experts also warned crypto nations could be risky to tackle a series of problems, including financial integrity, regulations, criminal act like money laundering and environmental sustainability risks and issues.
Last month, IMF officials voiced their concern that Bitcoin in El Salvador will cause server legal and economic issues.
The adoption of Bitcoin as legal tender in El Salvador also raised sceptical resistance domestically. More than 75% of Salvadoran distrust Bitcoin to become fiat money.
Image source: Shutterstock
