In September 2021, El Salvadorian President Nayib Bukele pushed Bitcoin as the country's legal tender alongside the US dollar. While this bold move has made Nayib Bukele an idol among all crypto enthusiasts, it has also brought great fear in the country and criticisms from the International Monetary Funds. The IMF has previously warned President Nayib Bukele and asked him to reconsider making Bitcoin the center of El Salvador's economy. However, this time IMF's directors used much stronger language to urge El Salvador's authorities to remove Bitcoin's legal tender status. They further highlighted that using Bitcoin poses a significant threat to consumer protection, financial stability, and the nation's integrity.
In 2021, the cryptocurrency trend shot to the moon as Bitcoin reached its all-time high of $67,734 in November. The trend was not lost on the 2019-elected president who came to power on the promises of fighting organized crimes and improving the security in his country. Bukele legalized Bitcoin and partnered with Acumen to provide low-interest Bitcoin-back loans to its citizens. President Bukele's vision to bring the Bitcoin revolution to El Salvador can significantly boost economic development and jobs, but this move has divided the country.
Adopting Bitcoin as a legal tender gives rise to various macroeconomic, financial, and legal issues, making IMF wary of El Salvador's move. It has drawn worldwide attention, and protests were sparked on the streets of El Salvador's capital over Bukele's judicial reforms. Bitcoin trading at almost half of its record value of $67,734 has also set back the country with nearly $20 million in losses. But it didn't deter Bukele, who is preparing to issue $1 billion in bonds and plans to buy Bitcoins with half of it. IMF has also stated that El Salvador is on an unsustainable path with its debt spending. At the current rate, the public debt can rise to match the country's GDP in 2026.