El Salvador adopting Bitcoin (BTC) as a parallel currency to the US dollar in September could substantially reduce the costs of remittances, which are a vital source of income for millions.
According to the region’s development bank, other Central American countries are zealously waiting to see if that happens, because if it does, they themselves may soon be adopting Bitcoin.
Dante Mossi, Executive President of the Central American Bank for Economic Integration (CABEI), he said told Reuters that “everyone is looking to see if El Salvador is doing well and if, for example, the cost of remittances drops substantially … other countries are likely to look to that advantage and embrace it. ”
El Salvador has a population of 6.5 million, with more than 2 million living abroad and sending money to their families.
As insulted by the president Nayib Bukele, what approved Legislation in Parliament in June , thanks to a majority of his Nuevas Ideas party in the assembly, Bitcoin will facilitate the payment of remittances from Salvadorans living abroad and positively impact the economy of the country that needs help.
Nuestro pueblo pays $400 MILLONES a year in commission for the shipments.
Solo this ahorro will be a huge benefit for our people (at least for those who want it).
Also there is the advantage of the tener that loads staff. More secure and more practical.
— Nayib Bukele 🇸🇻 (@nayibbukele) August 23, 2021
With more than 20% of the country’s gross domestic product (GDP) made up of remittances, adopting Bitcoin could dramatically change the game in favor of Salvadorans
In the first half of 2021, El Salvador received $3.6 billion in remittances. An increase of 45.3% compared to previous years.
They account for 23% of the country’s GDP and benefit about 360,000 households, with 95.4% sent from the U.S.
El Salvador 🇸🇻 needs # Bitcoin
— Documenting Bitcoin 📄 (@DocumentingBTC) July 27, 2021
Important demonstration of support
According to Reuters, Mossi called legal tender adoption an “out-of-this-world experiment” with the aim of promoting financial inclusion in a region where many do not have access to bank accounts and rely heavily on money sent by relatives living in the United States.
Mossi stressed that CABEI had a “fiduciary obligation” to help El Salvador in its aid application, as the regional development bank is providing technical assistance to the country in implementing the cryptocurrency, while the world Bank refused their support.
“Guatemala, Honduras and El Salvador are the countries that stand to gain the most if adopting Bitcoin reduced the cost of sending remittances,” Mossi told Reuters, noting that the Central American nations that receive the most remittances are likely to follow. the example of Bukele.