| On Crypto Inner City Press
at IMF Asks of El Salvador Bitcoin Risk Called
Key Element Here
by
Matthew Russell Lee, Patreon Substack
IMF, April 4 – On
Bitcoin and El Salvador, Inner
City Press at the
International Monetary Fund on
April 4 asked Spokesperson
Julie Kozack about any linkage
between an IMF program and
reversing the legal tender
status of Bitcoin there.
Ms. Kozack
praised some developments in
El Salvador, but said that
addressing the risks of
Bitcoin are a "key element."
Inner City Press also asked
about Ethiopia, Papua New
Guinea and, full circle, Sri
Lanka. From the IMF transcript,
on El Salvador and Bitcoin:
Matthew Russell
Lee, Inner City Press: "on El
Salvador, some are saying that
a program there is in some way
linked to possibly removing
bitcoin as legal tender
status. I don't know if
that's the case. And
just generally, what can you
say about El Salvador's
progress and possible program?"
IMF Spokesperson
Kozack: "IMF staff continue to
engage constructively with the
Salvadorian authorities with
the objective of reaching an
agreement on an IMF supported
program. Discussions are
focused on policies to
strengthen fiscal and external
sustainability and to boost
productivity growth and
strengthen economic
governance.
Addressing
risks arising from Bitcoin
is a key element of our
discussions with the
authorities.
With respect to
very recent developments, real
GDP growth strengthened in
2023, driven by tourism and
construction, and this
happened on the back of robust
remittances and a
much-improved security
situation. Inflation
came down, the current account
deficit narrowed, and this was
supported in part by lower
global commodity prices.
With respect to fiscal policy,
it was somewhat accommodative
last year, driven by higher
pension spending and public
investment, although efforts
were made to contain current
expenditures and to regularize
spending arrears."
Back on
March 7, a year after the
failure of Silicon Valley Bank
and Signature Bank, the
International Monetary Fund
has warned of more trouble,
just as NYCB teeters. Inner
City Press on March 7 asked
the IMF about it, video here.
The IMF had
said, "the high concentration
of CRE [commercial real
estate] exposures represents a
serious risk to small and
large banks amid economic
uncertainty and higher
interest rates, potentially
declining property values, and
asset quality deterioration.”
Small banks
retain “exceptionally high CRE
concentration for which losses
could compromise their safety
and soundness”, it added.
Nearly 33% of US banks have
commercial property loan books
which are so big versus their
capital buffers that they
exceed regulatory guidance. So
where are the
regulators?
Inner City
Press asked the IMF
spokesperson, noting the
Mnuchin investment in NYCB
(and imposition of Joseph
Otting as CEO).
IMF Spokesperson
Julie Kozack replied that the
risk is real and is being
studied, with more to come in
the GSFR. Watch this site.
***
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