El Salvador, the pioneering country in recognizing Bitcoin as legal tender, is considering changing its policy to access a $1.3 billion loan package from the International Monetary Fund (IMF).
This is an agreement between El Salvador and the International Monetary Fund (IMF), in the context of this country having to consider cashing out the $300 million in Bitcoin profits in order to receive a loan package more than 4 times larger. This agreement not only unlocks the loan from the IMF but also helps the country access an additional $1 billion from the World Bank (WB) and $1 billion from the Inter-American Development Bank (IDB).
To achieve this, El Salvador must adjust its economic policies, including:
- Stopping the recognition of Bitcoin as legal tender.
- Narrowing the scope of the Bitcoin Law and reducing the public sector's exposure to BTC.
- Amending the regulations that make it mandatory for businesses to accept Bitcoin to make it voluntary.
The IMF believes that the use of Bitcoin could pose risks to economic stability due to its high price volatility and the risk of money laundering. At the same time, the organization requires El Salvador to reduce its fiscal deficit through spending cuts or revenue increases.
