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September 8th, 2021 
Awake Goy 
El Salvador does not have a currency of its own, instead relying on the US dollar. Adding another currency to the mix that’s prone to wild changes in value will further complicate the government’s budget and tax planning.
It’s also a nightmare for households and businesses, who now have to devote time and resources to deciding whether to hold their funds in dollars or bitcoin. With crypto prices prone to wild swings, the stakes are high.
Another risk: Adopting bitcoin as legal tender may also encourage crime to flourish, according to the International Monetary Fund, which agreed to provide $389 million in emergency funding to El Salvador in April 2020.
“Without robust anti-money laundering and combating the financing of terrorism measures, cryptoassets can be used to launder ill-gotten money, fund terrorism, and evade taxes. This could pose risks to a country’s financial system, fiscal balance, and relationships with foreign countries and correspondent banks,” the IMF said in July.
Big picture: Credit rating agencies are not impressed. In late July, Moody’s Investors Service pushed El Salvador’s debt deeper into junk territory, citing “a deterioration in the quality of policymaking” including the government’s decision to adopt bitcoin as legal tender.
Moody’s said the country remains susceptible to financing shocks that could jeopardize the government’s ability to repay creditors starting in January 2023. That means El Salvador is likely to need another bailout from the IMF.
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