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“Next week, I will send a bill to Congress that will make bitcoin legal tender,” Bukele said, according to conference organizer Bitcoin Magazine.
Bukele, a 39-year-old right-wing populist who came to power in 2019, holds a strong majority of 56 out of 84 seats since a landslide victory in the legislative elections last March. This means that the bill is likely to be passed.
Bukele said El Salvador had partnered with digital finance company Strike to establish the logistics for the decision.
“Over 70% of El Salvador’s workforce does not have a bank account. They are not part of the financial system,” said Jack Mallers, CEO of Strike. “They asked me to help write a plan and they saw bitcoin as a world class currency and we needed to put a bitcoin plan in place to help these people.”
El Salvador currently uses the United States dollar as its official currency.
The future of digital currencies
Although central banks around the world have reacted to bitcoin with fascination, they have been reluctant to embrace cryptocurrencies due to their extreme volatility. Bitcoin, for example, collapsed by more than half of its value earlier this year after hitting a record above $ 60,000. Other more finely traded cryptocurrencies are even more volatile, trading up and down like swings often based on speculation or memes from Tesla CEO Elon Musk.
However, the growing popularity of crypto has led the Federal Reserve to take a close look at the limitations of the old-fashioned dollar, especially when it comes to payments and money transfers which can take days to complete. Bitcoin transactions happen almost instantly.
Cryptocurrencies do not require a bank account either. Instead, they are held in digital wallets. This could help people in poorer communities, like many in El Salvador, but also minority communities in the United States, to have better access to their finances.
Lael Brainard, a member of the Federal Reserve Board of Governors, argued last month for a secure, central bank-backed digital currency that could create a more efficient payments system and extend financial services to Americans who have been underserved. by traditional banks.
Federal Reserve Chairman Jerome Powell announced in May that the central bank would release a paper this summer outlining the board’s thinking on the benefits and risks associated with a digital US dollar.
Although cryptocurrencies like bitcoin are digital, a central bank digital currency would be fundamentally different from today’s cryptos because it would still be controlled by a central bank rather than a decentralized computer network.
– CNN’s Stefano Pozzebon and Allison Morrow contributed to this report
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