[Asia Economy Reporter Eunmo Koo] El Salvador is pushing to become the first country in the world to designate the cryptocurrency Bitcoin as a legally recognized currency.
According to Bloomberg and other sources, President Nayib Bukele of El Salvador attended the 'Bitcoin 2021 Conference' held in Miami, USA, on the 5th (local time) via video and announced plans to submit a bill to the legislature next week to make Bitcoin legal tender.
In a pre-recorded video, President Bukele explained the bill, saying, "In the short term, it will help create jobs and provide financial access to those outside the formal economy." He also announced a partnership with the digital wallet company Strike to build financial infrastructure for Bitcoin technology in El Salvador. Earlier, Strike launched a mobile payment application in El Salvador in March.
Since the ruling party 'Nuevas Ideas,' led by President Bukele, holds the majority in the legislature, the bill is likely to pass once submitted. CNBC reported that if the bill is enacted, El Salvador will become the first country in the world to accept Bitcoin as legal tender. According to the broadcast, Strike founder Jack Mallers stated at the conference, "By adopting digital currency as legal tender, El Salvador will gain the safest, most efficient, and globally integrated open payment network."
About 70% of El Salvador's population does not have bank accounts or credit cards, so most economic activities are conducted in cash. In addition to the inconvenience of financial transactions, the fact that remittances sent by citizens from abroad to the country account for about 20% of the gross domestic product (GDP) has raised the issue of heavy fee burdens.
Mallers said, "More than 70% of the working population in El Salvador does not have bank accounts and is outside the financial system," adding, "They asked me to help draft the bill." He argued, "Bitcoin is the greatest reserve asset and an excellent monetary network ever created in history," and "Holding Bitcoin provides a way to protect developing economies from the shocks of nominal currency inflation."
However, it remains to be seen whether Bitcoin can function properly as a legal payment method in El Salvador. The country is considered politically and socially unstable with rampant criminal groups threatening public safety. President Bukele, who leads a populist regime, recently sparked controversy by ousting the attorney general and supreme court justices who opposed him, undermining the rule of law.
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