Other Central American Countries Watching El Salvador’s “Out Of This World Experiment” to Adopt Bitcoin Too, Says CABEI President
The executive president of the region's development bank said, “everyone is watching” if Bitcoin adoption helps El Salvador reduce the cost of remittances so that they can also adopt the cryptocurrency.
Central American Bank for Economic Integration (CABEI), the development bank of El Salvador, said central American countries are eagerly waiting to see how their bitcoin adoption as a legal tender, alongside the US dollar, cuts the cost of remittances for them.
Remittance is an important source of income for millions of people in the region, and President Nayib Bukele touted Bitcoin adoption as a way to facilitate remittance payments from those living abroad.
“Everyone is watching if it goes well for El Salvador and if, for example, the cost of remittances drops substantially … other countries will probably seek that advantage and adopt it,” Dante Mossi, the executive president of the CABEI, told Reuters.
According to him, countries that receive the most remittances are most likely to turn to Bitcoin, adding besides El Salvador, Guatemala, and Honduras have the most to gain if Bitcoin helps lower the cost of sending remittances.
Recently, CABEI also attended a Central American Monetary Council meeting, part of the Central American Integration System (SICA), where participants asked about El Salvador's bitcoin plans and showed interest, Mossi said.
Mossi called this an “out of this world experiment” that he says will increase financial inclusion in a region where many people lack access to bank accounts or credit cards.
Please do point me to the communities being lifted out of poverty due to crypto, other than scammers ripping off unsuspecting people in pump and dump schemes. https://t.co/jJXpYrnh5F
— Neel Kashkari (@neelkashkari) August 23, 2021
Carlos Sanchez, CABEI's head of investments, said the bank's technical assistance, meant to help El Salvador “navigate waters that have yet to be explored,” is focused on helping them design a legal framework and to make sure that international money laundering protocols are adhered to.
Mossi meanwhile said CABEI had a “fiduciary obligation” to support El Salvador in its request for help.
CABEI is giving El Salvador technical assistance on implementing the cryptocurrency after the World Bank declined to help, citing environmental and transparency drawbacks.
“Regionalism v Globalism,” commented Su Zhu, CEO of Three Arrows Capital, to this.
As we reported this week, Bukele said the country is installing 200 ATMs and preparing over 50 bank branches to handle crypto in preparation to adopt BTC as legal currency.
It looks like details about the @chivowallet (El Salvador wallet) may have leaked.
— Aaron van Wirdum (@AaronvanW) August 24, 2021
The government is also giving $30 in bitcoin to those who download its cryptocurrency app called Chivo that is accessible to both citizens and tourists. Transactions in the app will be commission-free, helping save the country $400 million per year in fees, Bukele tweeted.
It was early in June this year when Bukele made the announcement that El Salvador is becoming the first sovereign nation to declare Bitcoin a legal tender. By the end of the month, Congress approved his plan to give the leading cryptocurrency the official currency status with a supermajority.
The law will take effect on September 7.