El Salvador should remove bitcoin's (EXANTE: Bitcoin) legal tender status over large risks associated with the use of the cryptocurrency on financial stability, the International Monetary Fund (IMF) wrote in a recent press release.
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The organization added that even though digital wallets like Chivo boost financial inclusion, executive directors highlighted the need for strict regulation and oversight. Directors also expressed concern over the risks associated with issuing bitcoin-backed bonds.
Earlier in January, the IMF expressed concerns regarding the growing interconnectedness between cryptocurrencies and stocks. The organization warned in a recent report that a tight correlation between crypto and stocks can destabilize financial markets.
The IMF supposes that the "extraordinary central bank crisis responses" of early 2020 made both crypto prices and US stocks surge amid easy global financial conditions and greater investor risk appetite. The experts call for the coordinated global regulatory framework for cryptocurrencies to mitigate the financial stability risks stemming from the crypto ecosystem.
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