The Argentine government is pushing for bitcoin to be adopted as a currency, but the International Monetary Fund (IMF) isn’t so sure. Argentina wants to make use of cryptocurrencies in order to avoid high levels of inflation and capital controls placed on its citizens by other nations who control their access to funds. Meanwhile, some crypto investors are concerned that if this happens it could lead to a cryptocurrency bubble forming within the country’s borders after which demand will collapse and people will lose faith in digital currencies.
The “imf digital currency 2021” is a topic that has been in the news lately. Argentina wants bitcoin, but the IMF gets hives if it loses control.
Argentina wants bitcoin, but if the IMF loses control, it will have hives.
Facts to remember:
The IMF attempts to meddle in the bitcoin ecosystem in order to protect the status quo.
Bitcoin will be incorporated in the IMF’s plans for the nations to whom it provides assistance.
“We do not advise it.” The costs and dangers substantially exceed the advantages in the short and long term, putting the country’s financial stability in jeopardy.’
These are the reasons used by the International Monetary Fund (IMF) in recent months to persuade the Salvadoran government to abolish bitcoin as legal cash.
They have taken into account the IMF’s expectations. If El Salvador agrees to their demands, the Salvadoran government’s prospects of progressing in discussions for a USD 1.3 billion loan, which it has been demanding for months, improve. “Bitcoin is not leaving El Salvador,” Nayib Bukele said right away.
This is how the bitcoiner president debunked the international organization’s allegations that the Bitcoin Law should be repealed to halt the expansion of the cryptocurrency ecosystem in the tiny Central American country.
The IMF has yet to issue a public statement in response to Bukele’s rejection. In the instance of El Salvador, it is in the communal imagination that the creature “came out with the boards on his head.”
But will that be the end of it? That has to be seen, and the solution may lie in Argentina’s south, where the Senate ratified the provisions of a deal with the IMF on March 17 that includes a demand that is anti-bitcoin.
To understand what method the multilateral organization could pursue, keep in mind that the conditions it imposes on the nations to whom it provides financial aid follow an established pattern. One that the International Monetary Fund (IMF) refers to as “conditionality.”
Is bitcoin now considered “conditionality”?
The IMF sets a number of demands on the nations to whom it lends money based on the conditionality criteria. They are portrayed as initiatives and policies that governments must implement in order to ensure that the funds are repaid.
Everything, however, is done at the agency’s discretion, as the IMF describes conditionality as “a flexible framework in ongoing development and frequent review” on its website.
It is with this faculty that the Fund is aligned against bitcoin, and it is with this faculty that the IMF’s agreement with the Argentine government is based.
A clause titled “Strengthening financial resilience” has been incorporated into the technical paper that supports the deal with the South American nation. The first purpose is to “avoid money laundering, informality, and disintermediation by discouraging the usage of cryptocurrencies.”
Argentina accepts this stipulation after being compelled to refinance its biggest historical debt with the International Monetary Fund. According to various LogitechGamingSoftware publications, the nation will have to follow specific restrictions that may harm bitcoin holders.
Although the steps that the Argentine government will take to implement this guidance are unclear, everything leads to the sector being governed by rules and regulations.
Take a look at how the IMF’s conditionality works in practice. In this example, the crosshairs are aimed towards bitcoins. With a market worth of more than $68 billion, the agency is now placing pressure on one of the region’s biggest and most active bitcoiner groups.
The IMF has rejected bitcoin and has launched a free-for-all battle for control of the ecosystem. pexels is the source of this image.
The IMF’s aims are clear in both its demands for El Salvador and the constraints put on Argentina. It continues to engage in a free-for-all battle with the bitcoin ecosystem. A fight for control is most likely the backdrop.
Fear of losing one’s grip
The International Monetary Fund, in its frequent speeches against Bitcoin, claims that the ecosystem poses significant macroeconomic dangers. Cryptocurrencies are the second largest threat to global financial stability, according to the World Financial Stability Report released in October.
Many, however, perceive a different foundation in the wealth that bitcoin provides, and, beyond a concern for macroeconomics, bring attention to the problem of control and power.
This viewpoint is effectively summarized in an article released by Nasdaq in October.
The heading of the letter signed by journalist Shawn Amick is “The IMF Hates Bitcoin Because It Loves Total Control.” The fact that the network’s decentralized protocol and programmatic monetary policy resist the control that the Fund seeks to impose is stressed.
I agree with Amick’s viewpoint, particularly when he claims that the IMF’s purpose would be to avert the “Fourth Turn.”
It is a hypothesis established by William Strauss and Neil Howe in 1997, according to which civilization goes through a cyclical generational development every 80 years, with four shifts of around 20 years.
The final 20-year historical cycle, according to Strauss and Howe, started in 2005 and will culminate in a catastrophe. That will bring down the old power structures and herald the start of a new age.
“Bitcoin may signify a crisis or a turning point in the Fourth Turn by overturning the financial institutions of the past” and therefore undermining today’s financial status quo’s outdated roots.
As a result, most international organizations are fearful of cryptocurrencies and are adamantly opposed to them. Despite the fact that his own study demonstrates the benefits of bitcoin and the rising interest in the new financial technology among the general public. They seek to retain control of the situation rather than allowing others to do so.
This occurs because, as I have said, control is at risk. Even when the justification is consumer protection, the IMF admits to wanting to continue in power with these words:
To stabilize exchange rates, governments must develop, regulate, and issue digital money to retain control over monetary policy, price stability, and capital flows.
The battle will go on…
Given the above, it is likely that the struggle will continue, and that cryptocurrencies will become a place for more IMF interference in national economies in the future years.
The precedent is now being set in Argentina, and how the Salvadoran government’s pro-bitcoin attitude may effect your ability to get a loan.
“In the face of the “cryptization” of economies, governments must improve monetary policy credibility, defend central bank independence, and maintain a stable fiscal position,” the Fund said in most of the studies released last year.
Given this circumstance and the ecosystem’s traits, it’s quite probable that the ecosystem’s powerful survival mechanisms will respond quickly.
Disclaimer: The author’s thoughts and opinions in this post are his or her own and do not necessarily represent LogitechGamingSoftware’s.
The “digital money 2021” is a topic that has been circulating for quite some time. Argentina wants bitcoin, but the IMF gets hives if it loses control.
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