Expert Chaslau Koniukh
  • Companies
  • Global investment
  • Investors
  • Terminology
  • Economy
  • Stock Market
  • World exchanges
  • Tech and Marketing
El Salvador
Economy

El Salvador has made bitcoin the state currency: what it means for the country

12.05.2022
2 min read

El Salvador officially uses bitcoin: risks to the economy

El Salvador became the first country to make bitcoin a national currency. The government explains this step by its desire to give a strong impetus to the development of the economy. However, experts from the IMF and the World Bank are not so optimistic, they believe that bitcoin poses a serious threat to the country.
A new law obliges all Salvadoran companies to accept cryptocurrency, which can be used to pay taxes. So far, the government has bought $26 million worth of bitcoins, and it plans to buy more over time.
Citizens will open electronic wallets, and to start using them, they need to download a special application. The account holds a welcome bonus of $30. Authorities have assured people that exchanging bitcoins for dollars will be very easy – to do this, 200 special ATMs will be installed across the country and an additional 50 points will be opened for customer service. As for the rate of crypto to the dollar – it will be fixed with regard to the market, the conversion fee will be paid by the government. In addition, there is no capital gains tax on the exchange.
It should be noted that El Salvador has no national currency, it was taken out of circulation in 2004. The reason was high inflation and exchange rate instability. All transactions are made with the dollar, and now bitcoin, but the use of crypto is not mandatory.El Salvador officially uses bitcoinAccording to the president, the introduction of bitcoin should improve the country’s economy, much of which is in the shadows. 70% of residents do not have bank accounts, as they work illegally, the main income of the state is considered drug trafficking – each year more than 5 tons of cocaine is transported through El Salvador from South America to the North.
In addition, bitcoin will become an alternative to the dollar and reduce the economic risk, which entails complete dependence on U.S. currency. A number of experts suggest that the innovation may soon turn the country into a cryptocurrency offshore. Currency risks associated with exchange rate differences will also grow.
However, the main problem of bitcoin is called volatility. The day before the law was passed in El Salvador, the cryptocurrency price began to decline and fell to $43,000 per coin from a peak of $52,500. Thus, the crypto market capitalization lost $300 billion.
The new law was opposed not only by the citizens of the country, but also by international financial regulators. The IMF noted that they consider the status of bitcoin as a national currency dangerous, which will lead to price instability in the domestic market. In addition, such a decision makes it difficult for El Salvador to obtain international loans, which are necessary to support the local economy.

Tags: Economy
0
Previous Post Who is David Dodd: biography of the famous American economist Next Post The European Union created a fund of 5 billion euros to help businesses

You Might Also Like

German industry
Economy
German industry sees record accumulation of backlogs
18.08.2022
buy gas from the USA
Economy
Why it is unprofitable for Europe to buy gas from the US
01.06.2020
GDP of African countries
Economy
African GDP was able to withstand the coronavirus pandemic
18.03.2021
development of hydrogen energy
Economy
Japan invests in the development of hydrogen energy
22.01.2022
financial trap
Economy
The Chinese government can expect a financial trap
07.04.2021
revise the legislation
Economy
South Korea plans to revise legislation to improve relations with DPRK
13.03.2021

Recent Posts

  • 1Brookfield
    Brookfield and Closed Loop create the largest recycling company in the U.S.
    30.01.2023
  • 2Bybit
    Cryptocurrency exchange Bybit provided information about the volume of stored assets
    29.01.2023
  • 3Apple Search
    Apple Corporation is working on its own search engine, Apple Search
    28.01.2023
  • 4Tom Ford brand
    Estee Lauder made a deal to buy the fashion brand Tom Ford
    27.01.2023
  • 5Golden Visa
    The Golden Visa program has brought Portugal more than 6 billion euros during its existence
    26.01.2023

Popular Posts

  • Field of activity of the American Monsanto Company Corporation
  • Skolkovo analysts: the Russian energy market is suffering losses
  • Businessman Chuck Feeney: the man who gave the world Duty Free
  • PRC government revises trade rules for Hainan seaport

Social media

Editor's Picks

Chaslau Koniukh
Analytics

American bankers from JPMorgan and Goldman Sachs advise to invest in gold: review by Chaslau Koniukh.

Press Secretary
17.08.2020
Expert Chaslau Koniukh
Analytics

Chaslau Koniukh on the analysts’ opinion on the key stake size change soon

Press Secretary
18.06.2020
expert Chaslau Koniukh
Analytics

Chaslau Koniukh: Internet trade market in Russia may reach 2.78 trillion rubles.

Press Secretary
30.05.2020
Will the U.S. oil shale industry be able to quickly recover from the crisis: A Review by Chaslau Koniukh
Analytics

Will the U.S. oil shale industry be able to quickly recover from the crisis: A Review by Chaslau Koniukh

Press Secretary
16.05.2020

Latest Posts

Brookfield
Brookfield and Closed Loop create the largest recycling company in the U.S.
30.01.2023
Bybit
Cryptocurrency exchange Bybit provided information about the volume of stored assets
29.01.2023
Apple Search
Apple Corporation is working on its own search engine, Apple Search
28.01.2023

Chaslau Koniukh

Expert Chaslau Koniukh

Chaslau Koniukh – an expert in marketing and project management, IT consulting, international investments, investor, financial analyst. A commodity trader, private consultant, entrepreneur, lecturer, author of several articles on the stock market.

Popular Posts

  • Field of activity of the American Monsanto Company Corporation
  • Skolkovo analysts: the Russian energy market is suffering losses
  • Businessman Chuck Feeney: the man who gave the world Duty Free
  • PRC government revises trade rules for Hainan seaport
  • British company Vertical Aerospace plans to go public in New York
Expert Chaslau Koniukh
  • Facebook
  • Twitter
  • Instagram
  • Biography

Chaslau Koniukh – an expert in marketing and project management, international investments, financial analyst.

Social media

Menu

  • Biography
  • Companies and corporations
  • Global investment
  • Investors and Entrepreneurs
  • Economy
  • Market terminology
  • Stock Market
  • World exchanges
  • Tech and Marketing
  • Analytics