El Salvador Rejects IMF Call to Abandon Bitcoin as Legal Tender

[e_abrams]

It looks like El Salvador is fully committed to their choice to accept Bitcoin as a legal tender.
Personally, I think the IMF is so against it because if this choice proves successful for El Salvador in the long run, other countries will follow suit sooner or later.

[vv181]

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How is this going to affect the economy of El-Salvador, will IMF take any legal action against them or just allow them to have their way?

What kind of legal action they could make anyway?

AFAIK, IMF urgency to remove the legal tender status of Bitcoin is due to mainly it posses to financial instability and other customer-centric issues. Thus I believe El Salvador does not have any obligation to follow what IMF suggest as far as I am concerned, otherwise, there may be some plausible legal action that they will make that I didn't know. After all, I believe El Salvador does indeed should know better about what their country should do instead of solely relying on other entities.

[avikz]

How is this going to affect the economy of El-Salvador, will IMF take any legal action against them or just allow them to have their way?

I don't think IMF can take any legal action against a country's decision on sovereignty. However, IMF holds a severe lending power which they can made unavailable for El-Salvador. And if IMF denies to lend them money for their needs, I am sure world bank will follow the same path even though these two organizations are different.

It's great to see how a small nation is holding onto their decision and not bending down in front of international pressure  i just hope bitcoin serves their economy well.

[noorman0]

I think it was completely expected. El Salvador chose to adopt Bitcoin against the recommendation of the IMF, so it's not surprising that they won't listen to them now. What is also great from El Salvador is that, while they're not in a good place economically, they are not dependent on loans from the IMF. In my country, the IMF has a great leverage because of the loans we keep taking and the money we already owe, so it could stop crypto adoption. But in El Salvador, they don't have much to be afraid of. So, answering the question of it affecting the economy, I think the impact is going to be very small, unless the IMF figures out how to pressure someone else who does have strong ties with El Salvador and has more leverage.

Yes, that's the only risk against the IMF, Elsalvador will eventually be excluded from getting a loan because it is considered a country that will not have economic stability according to IMF standards. I was wondering about the update on Elsalvador applying for a loan to the IMF last year ^[1], does it have anything to do with the rejection of the IMF recommendation (eg whether the proposal was rejected)?

[1] https://fortune.com/2021/10/19/el-salvador-bitcoin-imf-loan/?queryly=related_article

[Japinat]

How is this going to affect the economy of El-Salvador, will IMF take any legal action against them or just allow them to have their way?

I don't think IMF can take any legal action against a country's decision on sovereignty. However, IMF holds a severe lending power which they can made unavailable for El-Salvador. And if IMF denies to lend them money for their needs, I am sure world bank will follow the same path even though these two organizations are different.

It's great to see how a small nation is holding onto their decision and not bending down in front of international pressure  i just hope bitcoin serves their economy well.

There are slim chances that IMF will be able to hold back El Salvador because the country has proven that their decision is fixed and there is no stopping from bitcoin adoption. So maybe IMF should set their own limit as they have no power anymore to intervene with once country's fixed decision. This will be the start of a more challenging role for Bukele as whatever the consequences of his actions will be thrown against him. I just hope he can manage the situation well.