Despite the strong reluctance of the population, and criticism from economists and international financial organizations, El Salvador became, on September 7, the first country in the world to allow cryptocurrency as a legal currency, like the dollar. Any Salvadoran will have the legal option to use bitcoin instead of dollars.

The Salvadoran parliament, overwhelmingly dominated by supporters of president Nayib Bukele, passed the law in June which makes bitcoin legal tender in El Salvador, and which requires "accepting bitcoin as a mean of payment".

“Tomorrow, for the first time in history, all the eyes of the world will be on El Salvador”, wrote on Twitter the controversial and young (40) president of El Salvador, Nayib Bukele.

For the head of state and his government, the cryptocurrency will allow Salvadorans to save $400 million in bank charges when sending money by the diaspora, particularly in the United States, which represent 22% of the country's GDP.

However, a very large majority of residents are opposed to this measure. According to opinion polls, around 65.2% of the population is not interested in downloading the Chivo (“Great” in colloquial language) electronic wallet needed to carry out everyday bitcoin transactions, despite the 30 US dollars (38 Canadian dollars) of welcome offered by the government.

A fund of 150 million US dollars (190 million Canadian dollars) to guarantee the automatic convertibility of bitcoin into US dollars has been created. In addition, 200 ATMs for exchanging bitcoins are being installed.

Economists, but also the World Bank, the International Monetary Fund (IMF) and the Inter-American Development Bank (IDB) have expressed their skepticism.

This measure will have “a negative effect” on living conditions in El Salvador due to the high volatility of the exchange rate of bitcoin, and will have an effect on the prices of goods and services, according to the economist of the University of El Salvador Oscar Cabrera.

Bitcoin is the promise of a “Titanic that no one rules”, worries Oscar Cabrera, also a former president of the Central Bank of El Salvador.

The fact that the value of cryptocurrency is determined exclusively by the market makes it a highly volatile currency, insists the Salvadoran Foundation for Economic and Social Development (Fusades).

Main sources : Bitcoin Magazine, Wall Street Journal.

Publié le 13 septembre 2021