El Salvador president Nayib Bukele announced at the Bitcoin 2021 conference a proposal to make bitcoin legal tender in the Central American country. (Photo by Emerson Flores/APHOTOGRAFIA/Getty Images)
On June 5, at a conference in Miami, El Salvador President Nayib Bukele announced that the Central American country is in the process of adopting bitcoin as legal tender: a move that would make El Salvador the first country to deem bitcoin an official national currency. Despite El Salvador’s small size, Bukele’s effort is a major milestone in monetary policy history, one with significant ramifications for the global financial system.
At the Bitcoin 2021 conference, Bukele described his legislative proposal as a way to “design a country for the future.” On Twitter, he pointed out that if 1 percent of the world’s bitcoin moved to El Salvador, it would amount to a quarter of the country’s annual economic output.
And Bukele is not engaging in wishful thinking. Each year, Salvadoran emigrants send $6 billion home in remittances, from places like the United States. Indeed, 2.2 million people of Salvadoran ancestry live in the U.S., compared with 6.5 million in El Salvador itself. Today, Salvadoran emigrés’ remittances must travel back through middlemen who take cuts as large as 20 percent. “By using bitcoin,” tweeted Bukele, “the amount received by more than a million low income families will increase in the equivalent of billions of dollars every year.”