El Salvador president plans to make Bitcoin legal tender

The proposed legislation will generate jobs and help provide financial inclusion to thousands outside the formal economy, Nayib Bukele says

El Salvador President Nayib Bukele speaks during a news conference in San Salvador, El Salvador, June 6, 2021. REUTERS/Jose Cabezas
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El Salvador’s Nayib Bukele, Latin America’s youngest president who is known to break from the norms, said he plans to send legislation that would make Bitcoin legal tender in the country.

“In the short term, this will generate jobs and help provide financial inclusion to thousands outside the formal economy,” Mr Bukele said in a video broadcast at the Bitcoin 2021 conference in Miami. He said he would submit a bill next week to the legislature.

In a series of tweets, the 39-year-old leader said Bitcoin could help boost the economy. El Salvador’s low banking penetration rate – 70 per cent of the population does not have a bank account – could also improve with the use of Bitcoin, he said, adding that it would facilitate faster transfers for $6 billion of remittances a year.

“Financial inclusion is not only a moral imperative, but also a way to grow the country’s economy, providing access to credit, savings, investment and secure transactions,” he said. “We hope that this decision will be just the beginning in providing a space where some of the leading innovators can reimagine the future of finance.”

El Salvador’s bonds tumbled last month after Mr Bukele’s party used the supermajority it won in February congressional elections to fire five top judges and the attorney general, drawing condemnation for what critics saw as a blatant power grab. Wall Street reacted swiftly, with Oppenheimer & Co, Amherst Pierpont Securities and Allianz among half-a-dozen firms that sold the notes or told clients to pare their holdings.

The move also fueled concern that the US will urge the International Monetary Fund to closely review a much-needed loan for El Salvador, potentially upending government finances.

Mr Bukele is among the region’s most popular leaders, according to public opinion polls that show him with an approval rating of more than 85 per cent. He has a strong social media following and charted an unconventional route to politics, working at his father’s marketing agency before serving terms as mayor of San Salvador and a suburb. He ran for president in 2018 pledging to curb corruption and rampant gang-fuelled crime, and became the first president in almost 30 years to win without the support of one of the major parties.

Jack Mallers, founder and chief executive of the payments platform Strike, presented Mr Bukele’s video during the meeting on Saturday. He said the El Salvadoran government asked him to help develop a plan for the use of Bitcoin, according to the Bitcoin 2021 conference’s Twitter account.