El Salvador signed a $1.4 billion loan agreement with the International Monetary Fund (IMF). Agreement, Bitcoin in the country $101,762.8It also includes regulations regarding the adoption of as legal currency. The IMF expects this condition to increase El Salvador’s economic stability and reduce its debt burden.
Critical Regulation Requests from the IMF to the Bitcoin Project
The IMF clarified El Salvador’s regulatory demands regarding the Bitcoin project. The adoption of Bitcoin as legal currency in 2021 negatively affected the country’s credit rating in international markets. The IMF placed special emphasis on reducing the risks brought by this policy.
The country agreed to reshape Bitcoin projects. The obligation for the private sector to use Bitcoin has been removed. Additionally, despite difficulties in projects such as the Chivo wallet, improvements are being made to the crypto infrastructure. According to the IMF’s statement, these steps “significantly reduced” the risks of the Bitcoin project.
Along with economic reforms, Nayib Bukele’s administration is on track to improve the country’s debt structure. Steps such as restructuring pension debts and refinancing local securities were taken. The aim is to regain confidence in bond markets.
Chivo Wallet and the Impact of Economic Reforms
El Salvador’s Chivo crypto wallet project has faced numerous technical challenges. Since its launch in 2021, the long-term success of the project has not lived up to expectations. Although the number of users is more than 3 million, the daily transaction rate of Chivo wallet remains below 2 percent.
Bukele’s government is turning to producing alternative routes by reducing dependence on Chivo. In this context, reforms were made to the legal position of Bitcoin. For the economic balance of the country, the discounted repurchase of bonds supports new financial policies compatible with the Fed’s interest rate decisions.
The use of Bitcoin as a strategic reserve attracts the attention of foreign markets. Elon Musk also praised this strategy. It is eagerly awaited to see how the agreement will contribute to the El Salvador economy in the long term.
Disclaimer: The information contained in this article does not constitute investment advice. Investors should be aware that cryptocurrencies carry high volatility and therefore risk, and should carry out their transactions in line with their own research.
