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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