El Salvador’s president says he will make the Bitcoin cryptocurrency legal tender in the country. If his plan is backed by congress, the Central American country would be first in the world to formally adopt the digital currency. It would be used alongside the US dollar, El Salvador’s official currency. President Nayib Bukele says Bitcoin will make it easier for Salvadorans living abroad to send payments home.
“In the short term, this will generate jobs and help provide financial inclusion to thousands outside the formal economy,” Mr Bukele told a Bitcoin conference in Florida, adding that it could also boost investment to the country.
He said he would send the legislation to congress next week. Should it pass, the move would open up financial services to the 70% of Salvadorans who do not have bank accounts, the president said.
El Salvador’s economy relies heavily on remittances, or money sent home from abroad, which make up around 20% of the country’s gross domestic product (GDP). More than two million Salvadorans live outside the country, but they continue to keep close ties to their place of birth, sending back more than $4bn (£2.9bn) each year.
Current services can charge fees for such transfers, which can take days to arrive and sometimes need to be picked up in person, according to the announcement.
“This will improve lives and the future of millions,” Mr Bukele said.
He did not give more details about how the policy would work. Bitcoin, a virtual asset with no direct connection to the real economy, has seen large fluctuations in value over the years.
Most of the world’s central banks are looking into the possibility of creating their own digital currencies. In April, the Bank of England announced it was looking into creating a digital money that would exist alongside cash and bank deposits.