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IMF Urges El Salvador to Drop Bitcoin

    IMF Urges El Salvador to Drop Bitcoin
    Last updated: 10 months ago
    Image credit: Richard Drew/AP [via Washington Post]

    Facts

    • Loan talks between the IMF and El Salvador stalled this week as the IMF urged the country to curtail its Bitcoin experiment. [1]
    • Nayib Bukele, the 40-year-old Salvadoran president, announced the adoption of Bitcoin as legal tender alongside the U.S. Dollar in Sep. 2021.
    • The value of the cryptocurrency has dropped nearly 50% since then, eroding the value of the country's treasury reserves. The country's bonds are also distressed. [1]
    • Bukele also announced plans to issue $1 billion in Bitcoin-backed bonds to pay for the development of a new Bitcoin-centric city powered by geothermal energy. [1]
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    Spin

    Narrative A

    Bukele is an aspiring dictator who has cracked down on independent institutions like the Supreme Court and who appears to be courting closer ties with authoritarian regimes around the world. The move to Bitcoin was a cynical and shortsighted populist ploy.

    Narrative B

    Although Bukele is controversial, and the jury is still out on how his bitcoin ventures will end, he has created a successful personality cult and helped empower the Salvadoran people--many of whom rely on remittances from family members abroad--by releasing them from dependence on foreign currencies and exploitative financial institutions.