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El Salvador became the first country in the world to give bitcoin legal value.
A Reuters report said a majority of lawmakers approved a bill, which was proposed by President Nayib Bukele. The law will pave the way for bitcoin to be approved as legal tender in the South American country.
The president has supported the use of cryptocurrency to stimulate the economy. El Salvador’s economy is based on remittances, and those who work overseas can send money home in bitcoins.
“It will bring financial inclusion, investment, tourism, innovation and economic development for our country,” Bukele said in a tweet.
He added that the use of bitcoin, the use of which will be optional, would not bring risks to users. Its use as legal tender will take effect in 90 days.
“The government will guarantee convertibility at the exact dollar value at the time of each transaction,” Bukele said.
Much of El Salvador’s dollarized economy relies on money sent back by workers overseas. Data from the World Bank showed that remittances to the country amounted to nearly $ 6 billion, or about one-fifth of GDP in 2019, one of the highest ratios in the world.
Experts said the switch to bitcoin could complicate talks with the IMF, where El Salvador is seeking a program worth more than $ 1 billion.
(With contributions from Reuters)
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