The Western view of El Salvador’s monetary policy remains characterized by great distrust. A new legislative proposal in the US House of Representatives is therefore intended to examine risks associated with the introduction of Bitcoin as a recognized means of payment in the Central American state. the Accountability for Cryptocurrency in El Salvador (ACES) Act is designed as a “companion law” to a similar proposal in the US Senate.
The Democratic MP Norma J Torres submitted the proposal on April 4 along with fellow Republican Rick Crawford. Their draft envisages the US State Department preparing a report on the situation in El Salvador following the introduction of Bitcoin. According to the press release are of particular interest to risks for economic stability, cyber security and democracy in El Salvador. Based on this report, a plan should be drawn up that minimizes potential risks to the US financial system.
Bitcoin adaptation is “rushed”
The two MPs justified their proposed law with skepticism about El Salvador’s President Nayib Bukele’s Bitcoin rate. Crawford described the BTC launch as “rushed” because he was concerned about economic relations between the two countries. In her statement, Torres also aimed at the supposed imprudence behind Bukele’s policy:
El Salvador is an independent democracy and we respect its right to self-government, but the United States must have a plan to protect our financial systems from the risks of this decision, which seems more like a reckless gamble than a thoughtful turn to innovation.
Norma Torres
With her emphasis on El Salvador’s independence, Torres may have anticipated an expected criticism of her proposed law. At the time of going to press, El Salvador’s president had not yet commented on this. However, when the analogous law in the US Senate took a step closer to voting at the end of March, Bukele commented by Twitterhe would not have believed that the US government was afraid of his Bitcoin policy.
The IMF is also skeptical
US politicians are not the only ones who have doubts about Bukele’s plans. The International Monetary Fund (IMF) already called on El Salvador to move away from the Bitcoin course in January. As a result, Bukele has been having difficulties getting a loan from the IMF for a year now. Also the rating agency Fitch downgraded the creditworthiness of the Central American state in February. The country reportedly lost $22 million during a recent crypto market slump.
Against the odds, El Salvador appears willing to continue walking on BTC-friendly paths. The introduction of the as Volcano Bonds Well-known bitcoin-based government bonds had to be postponed, but according to the will of Finance Minister Alejandro Zelaya, it is planned for April or May 2022.
In view of the disapproving attitude of the IMF, the country is probably not only looking for alternative sources of financing with government bonds. Behind a recent meeting between Bukele and the binance-CEO Changpeng Zhao is probably also the desire for private sector investors for El Salvador.
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