NEW DELHI : Rating agency Moody's Investors Service has downgraded the government of El Salvador's rating due to uncertainty surrounding the possibility of fresh financing from the International Monetary Fund (IMF) after the country adopted bitcoin as legal tender. On 9 June, El Salvador's legislative assembly approved the world's first law to make bitcoin legal tender in the country, such that both the US dollar and bitcoin are now legal currency for settling transactions. According to reports, the Central American country is in talks with IMF for a nearly $1 billion financing agreement. Meanwhile, IMF has been warning its member countries that the risks and costs of making cryptocurrencies legal tender outweigh the benefits. Moody’s, in its rating action report released on Thursday, lowered El Salvador's long-term foreign-currency issuer, and senior unsecured ratings to Caa1 and maintained the negative outlook.

Source: Mint July 31, 2021 10:30 UTC