Explained: What is the problem with giving legal status to cryptocurrencies? IMF told some important things

Regarding giving legal status to bitcoin, IMF says that its price fluctuates very fast. Because of this, there is a lot of risk involved in it.

Explained: What is the problem with giving legal status to cryptocurrencies?  IMF told some important things

Discussions are taking place all over the world regarding regulating and giving legal status to any cryptocurrency, including bitcoin. Central banks and governments around the world are seriously considering this direction. Recently, the Central American country El Salvador gave a legal tender to bitcoin. It is the first country to give legal tender to digital currency. The IMF has not yet supported this point. The International Monetary Fund says that Salvador should not have given a legal tender to Bitcoin.

Regarding giving legal status to bitcoin, IMF says that its price fluctuates very fast. Due to this, there is a lot of risk involved in this and it does not give assurance of consumer protection, financial stability, financial integrity. The IMF's statement came at a time when the President of El Salvador said that he would build a bitcoin city in his country. For this, a bitcoin bond of $1 billion will be issued.

Legal tender was received in September 2021

In September 2021, El Salvador gave a legal tender to bitcoin. Chivo Wallet has also been started for bitcoin transactions in this country, which is a digital wallet. The government there had deposited $ 30-30 in the Chivo wallet of every person in the country. Its purpose was to promote bitcoin transactions in the country. By the end of September, 45 percent of the country's population (3 million people) had downloaded the Chivo wallet. At that time also the Monetary Fund had warned about this.

IMF provides financial help and advice

IMF is a global financial institution. It not only issues technical advice to its member countries regarding the economy and financial stability, but also provides financial assistance from time to time. In July 2021, the IMF had appealed to its member countries through a blog not to give national currency status to any digital currency.

75 percent population does not have banking facility

Talking about El Salvador, 75 percent of the population there does not have banking facilities. However, the government wants the people there to see bitcoin as a national currency and do transactions in it. Before bitcoin, the dollar was the national currency there. The ruler there, while giving the status of national currency to bitcoin, said that it is not replacing the dollar, but will serve as a supplement.

Apart from the dollar, bitcoin also got the status of national currency.

The IMF said that both the dollar and bitcoin have got the status of national currency in El Salvado. In such a situation, when the people there will buy goods or services, then they will be confused as to what is the better option of payment for them. Apart from this, due to fluctuations in the price of bitcoin, there will also be fluctuations in inflation on a daily basis. Apart from this, the IMF told the problems related to all issues including government revenue, tax evasion, method of taxing, money laundering.

10 percent growth forecast this year

The President there has denied all the possibilities of the International Monetary Fund. However, he has also agreed on some things. According to a Reuters report, the IMF estimates that in 2021, the economy there will grow at the rate of 10 percent, while in 2022 the growth rate will be 3.2 percent. It has been said in the report that public debt has reached 85 percent of GDP there.

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