El Salvador

El Salvador’s adoption of Bitcoin as legal tender may imply a series of risks and regulatory challenges, International Monetary Fund spokesman Gerry Rice said on Thursday, Bloomberg News reported. “Adoption of Bitcoin as legal tender raises a number of macroeconomic, financial and legal issues that require very careful analysis so we are following developments closely and will continue our consultation with authorities,” Rice said, speaking in Washington.

El Salvador passed a new law on Wednesday that would make the small Central American country the world’s first to deem bitcoin legal tender, a move that analysts say risks putting its economy at the mercy of the digital currency’s sharp swings, the Wall Street Journal reported. The designation allows bitcoin, the world’s largest cryptocurrency by market value, to be used to buy goods and pay taxes and bank loans. Businesses would be required to accept bitcoin for payment, with the bitcoin-dollar exchange rate set by the market.

Ratings agency S&P has downgraded El Salvador’s sovereign credit rating to “selective default” after the government missed payments related to its pension debts, the Financial Times reported. The government missed $28.8m worth of payments due between April 7 and April 10 after the country’s Congress failed to approve a budgetary allocation to cover the payments. Assuming a solution is not found, the total owed is set to rise to $55.2m by the end of this month.

The parent of an aircraft maintenance company spun off by Air Canada is expanding in El Salvador even as its Canadian arm liquidates its assets after terminating more than 2,600 employees, Reuters reported. Aveos, which shut its doors in Canada earlier this week, has corporate ties with El Salvador's Aeroman, with Aero Technical Support & Services Holdings, a closely held company domiciled in Luxembourg, owning both of them. While Aveos may count the Salvadoran unit as part of its network, the two operations are independent of each other, said Ernesto Ruiz, chief executive of Aeroman.

Ecuador’s default on $3.9 billion of international bonds means it’s only a matter of time before the country drops the U.S. dollar as its currency, Goldman Sachs Group has said, Bloomberg reported. Ecuador’s use of the dollar gives President Rafael Correa no outlet for providing credit to the economy as access to foreign financing dries up and revenue from sales of oil, the nation’s biggest export, tumbles.