The demands by the IMF to El Salvador on Bitcoin show the institution to be on the wrong side of history and is bullish for cryptocurrencies, says the CEO of one of the world’s largest independent financial advisory, asset management and fintech organizations.
The damning observation by deVere Group’s Nigel Green, a game-changing crypto advocate, follow the International Monetary Fund urging the central American nation to reverse its decision to make Bitcoin legal tender.
In September, El Salvador became the first country to allow consumers to use the cryptocurrency in all transactions, alongside the U.S. dollar.
Mr Green says: “Of course, the situation in El Salvador needs to be monitored extremely carefully and every precaution must be taken to ensure the Bitcoin rollout truly benefits the population.
“But the IMF asking a pioneering sovereign nation to drop a future-focused financial policy that attempts to bring it out of financial instability and a reliance on another country’s currency shows the institution to be on the wrong side of history.
“Bitcoin is the world’s largest digital currency –- and digital is the inevitable future of money.
“This is why more and more institutional investors, household name investors, Wall Street giants and multinational corporations are all sensibly, increasing their exposure to crypto and bringing with them capital, reputational clout and expertise.
“They understand and value the key characteristics of Bitcoin and cryptocurrencies are designed for this century and, therefore, are growing in appeal.
“These include that they’re borderless, making them perfectly suited to a globalised world of commerce, trade, and people; that they are digital, making them an ideal match to the increasing digitalisation of our world; and that demographics are on the side of cryptocurrencies as younger people are more likely to embrace them than older generations.
“For the IMF not to recognise this is baffling.”
He continues: “Is the IMF scared of the future of finance? Why do they continue to want to pile on debts to poorer countries that they know are unlikely to be able to repay using traditional currencies? Is the IMF worried about the domino effect of nation-state adoption that might weaken their dominant global influence? If so, is this a warning shot to those countries?”
When El Salvador adopted Bitcoin as legal tender in September, Nigel Green predicted that three other countries would follow suit, perhaps as early as this year.
He said: “Low-income countries have long suffered because their currencies are weak and extremely vulnerable to market changes and that triggers rampant inflation.
“This is why most developing countries become reliant upon major ‘first-world’ currencies, such as the U.S. dollar, to complete transactions.
“However, reliance on another country’s currency also comes with its own set of, often very costly, problems. A stronger U.S. dollar, for example, will weigh on emerging-market economic prospects, since developing countries have taken on so much dollar-denominated debt in the past decades.”
The deVere boss went on to add: “By adopting cryptocurrency as legal tender these countries then immediately have a currency that isn’t influenced by market conditions within their own economy, nor directly from just one other country’s economy.
“Bitcoin operates on a global scale and therefore is impacted by wider, global economic changes.”
In addition, he noted, cryptocurrencies could also help “bolster financial inclusion for individuals and businesses” in developing countries as they “can circumnavigate the biases” of traditional banks and other financial services providers.
In regard to El Salvador’s response, a meme posted on Twitter by the president, Nayib Bukele, suggests his government is to reject the IMF’s calls.
Nigel Green concludes: “Institutions should be working with developing economies to find their way out of debt and financial instability in ways that are future-focused.
“Past methods, clearly, haven’t been as successful as they should have been.
“Therefore, it’s time to look ahead, not back.”