Bank of America positive about El Salvador’s embrace of Bitcoin
In a report published last week by the Bank of America, analysts were hopeful that El Salvador’s decision to recognize Bitcoin as legal tender could streamline remittances, promote financial digitization, provide consumers with greater choice. They also said that it could open the country to U.S. firms such as mining companies.
Bank of America highlighted in their latest Global Research report that remittances in El Salvador account for a massive 24% of the country’s gross domestic product, however a large portion of that is eaten up as transaction fees.
According to an image provided by state-backed Diario El Salvador, the report said:
“Using Bitcoin for remittances could potentially reduce transaction costs compared to traditional remittance channels. The idea is that Bitcoin could be used as an intermediary for the cross-border transfer, so that dollars are converted to Bitcoin by the sender and then converted back to dollars domestically by the receiver.”
Furthermore, the report noted on the possibilities that Bitcoin brings to the country:
“More than 70% of the adult population of El Salvador does not have a bank account. For that reason, democratizing access to electronic payments, through Bitcoin, has a progressive touch.”
— Diario El Salvador (@elsalvador) August 1, 2021
El Salvador became the first nation-state to accept Bitcoin as legal tender in June of this year after it passed the needed legislature. This move marked a significant milestone in the digital currency’s evolution towards mainstream acceptance and adoption. El Salvador’s decision to integrate Bitcoin was not well received by the International Monetary Fund. Banking giant JPMorgan though, is confident that other countries will follow suit.
Since El Salvador embraced Bitcoin as legal tender, several other Latin American nations have also suggested at pursuing a cryptocurrency strategy of their own, ranging from mining activities to Bitcoin legislation and regulation.
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Author: Peter Siu