President Nayib Bukele's congressional allies have already
approved legislation giving the cryptocurrency official currency status
alongside the US dollar, a first in the world. The move takes effect in
September.
Bukele has touted Bitcoin adoption as a way to facilitate
remittance payments from Salvadorans 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 Central American Bank for Economic Integration
(CABEI), told Reuters.
Mossi called the plan an "out of this world
experiment" geared at increasing financial inclusion in a region where
many people lack access to bank accounts or credit cards, and rely on money
sent home from relatives living in the United States.
CABEI, the regional development bank, is giving El Salvador
technical assistance on implementing the cryptocurrency, an important show of
support as the World Bank declined to help, citing environmental and
transparency drawbacks.
Mossi said the Central American nations that receive the
most remittances are those most likely to favour using Bitcoin and underscored
that CABEI had a "fiduciary obligation" to support El Salvador in its
request for help.
"Guatemala, Honduras, and El Salvador are the countries
that would have the most to gain if the adoption of Bitcoin lowered the cost of
sending remittances," said Mossi.
CABEI participated in a recent meeting of the Central American
Monetary Council, part of the Central American Integration System (SICA), where
participants asked about El Salvador's Bitcoin plans and showed interest, he
added.
The Central Bank of Honduras referred Reuters to a June 11
statement which said the bank does not prohibit, supervise or guarantee the use
of cryptocurrencies as methods of payment in the country.
The governments of Guatemala and Honduras did not
immediately respond to a request for comment.
Under 1 percent of the volume of global crossborder
remittances are currently in crypto, according to Autonomous Research, but in
the future crypto is expected to account for a larger slice of the more than
$500 billion in for annual global remittances.
Bitcoin offers, in theory, a quick and cheap way to send
money across borders without relying on traditional channels.
CABEI's head of investments Carlos Sanchez said the bank's
technical assistance is focused on helping El Salvador design a legal framework
for the adoption of Bitcoin and to make sure strict international money
laundering protocols are adhered to.
The assistance is meant to help El Salvador "navigate
waters that have yet to be explored," said Sanchez. -Reuters
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