Bank of America analysts said that El Salvador’s decision to recognize Bitcoin as legal tender can promote remittance and financial digitization, provide consumers with more choices, and open the country to U.S. companies and digital currency miners.
Bank of America, the largest bank in the United States, recognizes that Bitcoin offers many benefits to El Salvador with an extraordinary posture of support.
According to the bank, Bitcoin Can reduce the cost of remittance. These remittances account for almost a quarter of the country’s gross national product. In turn, this may increase the disposable income of Salvadorans.
Another benefit of Bitcoin The adoption is to provide banking services to non-bank customers. 70% of El Salvador’s population has no access to bank accounts.
El Salvador, like Iceland, can also attract foreign direct investment.
The report reads:
“Compared with traditional remittance channels, using Bitcoin for remittances may reduce transaction costs. The idea is that Bitcoin can be used as an intermediary for cross-border transfers so that U.S. dollars can be converted to Bitcoin by the sender, and then by the receiver in the country. Convert back to USD. If the conversion occurs automatically, volatility may decrease.
If Bitcoin does reduce transaction costs, then for every dollar that Salvadorans send home, recipients can earn more dollars by increasing their disposable income and reducing the part of the remittance lost by financial intermediaries.
Another positive effect is financial digitization. More than 70% of adults in El Salvador do not have a bank account. Therefore, the democratization of electronic payments through Bitcoin is progressive.
One can prove that the adoption of Bitcoin as legal tender is to give consumers more choices, embrace innovation and do more business with American companies. “
-El Salvador Newspaper (@elsalvador) August 1, 2021
El Salvador became the first country to accept Bitcoin as legal tender in June. This is an important milestone in the development of BTC.
The International Monetary Fund and the United Nations Economic Commission for Latin America and the Caribbean criticized the decision to include BTC in the financial system of El Salvador.
The World Bank also rejected El Salvador’s request to assist in the transition of BTC because the World Bank believes that concerns about the environmental impact and transparency of Bitcoin are the reason why they do not support El Salvador’s decision to accept Bitcoin as an official currency.
Since El Salvador has recognized Bitcoin as legal tender, many other Latin American countries have also stated that they are developing their own Bitcoin Cryptocurrency strategy.