IMF said recognizing Bitcoin as a national currency is "a step too far" after El Salvador's warning.

The International Monetary Fund (IMF) expressed concern over widespread Bitcoin adoption, stating that it would undermine macroeconomic stability. The International Monetary Fund (IMF) recently issued a warning that using Bitcoin (BTC) or any other cryptocurrency as a national currency poses major threats to macro-financial stability.

The IMF describes adopting cryptos as national currencies as "a step too far" and "an inadvisable shortcut," while recognizing the "advantages of their underlying technologies," in an official blog post written by Tobias Adrian, director of the monetary and capital markets department, and Rhoda Weeks-Brown, head of the legal department.

Dissecting the crypto treat

Money laundering, terrorism financing, and environmental repercussions are just a few of the most significant concerns raised by broad Bitcoin use, according to the blog post.

Cryptoassets can be used to launder ill-gotten money, fund terrorism, and evade taxes, the authors warned, adding that “this could pose risks to a country's financial system, fiscal balance, and relationships with foreign countries and correspondent banks” if robust anti-money laundering and counter-terrorist financing measures are not in place.

The blog post also mentioned that Bitcoin mining consumes "an tremendous amount of electricity," and that the environmental consequences of adopting crypto as a national currency "may be severe," but forgot to highlight measures to use renewable energy.

Aside from these abstract global risks, the authors detoured into an anxiety buildup in everyday living, while addressing specific individual-oriented tradeoffs, such as local price sustainability.

“As a result, domestic prices may become extremely volatile.” Even if all prices were quoted in Bitcoin, for example, the pricing of imported products and services would still change wildly due to market valuation whims.”

Similarly, the writers discussed how crypto may jeopardize consumer protection, stating that “large swings in value, fraud, or cyber-attacks could cause people and businesses to lose wealth.”

urging governments to take action

While the majority of the blog was devoted to warnings about the dangers and difficulties of Bitcoin adoption, the writers' final statements were written in an alarmist tone, urging governments to respond with a solution in the shape of a national digital currency (CBDC).

“Governments, on the other hand, must step up to offer these services and exploit new digital forms of money while maintaining stability, efficiency, equality, and environmental sustainability,” the authors concluded, concerned that “monetary policy is losing its bite.”


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