The digital colon would be a Salvadoran stablecoin pegged to the value of the US dollar. The Government denies that the plan is still in force, although leaked information suggests otherwise.
While preparing the project that would become the Bitcoin Law, El Salvador was considering creating a stablecoin. They sought to have a digital colon pegged to the local currency before the dollarization of the Central American country.
Local newspaper El Faro reported that the brothers of President Nayib Bukele presented the plan before the approval of Bitcoin as legal tender.
Ibrahim and Yusef Bukele held meetings with various foreign entrepreneurs linked to products for using and trading cryptocurrencies. Among them was Jack Mallers, CEO of Strike, who announced the Bitcoin Law alongside the Salvadoran President.
According to leaked information, the Bukele brothers presented themselves as advisers to the President, although they were not formally government officials. Ernesto Sanabria, press secretary of the President, said that the brothers of the Salvadoran head of State are his advisers for various decisions.
The digital colon plan would be to have a stablecoin pegged to the value of the US dollar. However, they would only use it internally with the wallet that the Government created. Among other things, El Salvador could again issue its money without depending on the US dollar.
On the other hand, there would be a fund of at least USD 500 million as a reserve to support the parity of the digital colon with the US dollar. They also proposed encouraging its use among Salvadorans through discounts for payments for services that the State offers.
Speculations on the Possible Validity of the Project in El Salvador
There is speculation on the possibility that this plan remains in place as the decision seemed to be final, said El Faro. Besides, the Salvadoran newspaper claimed to have documents that describe the project, contemplating the creation of the currency and a new digital financial system.
However, Sanabria denied that the plan of the Bukele brothers was still in effect. He explained that the public policy that the Government has promoted is that of Bitcoin on par with the US dollar. They would take the US dollar as the reference currency, Sanabria highlighted. He claimed that the rest were discarded ideas or simply third-party proposals.
According to El Faro, the materials they had access to do not indicate that the new digital currency will replace the US dollar. However, they noted that the Government already scheduled September 7th as the execution date for the project. At the same time as the Bitcoin Law takes effect, there would be a proof of concept for the digital colon.
Beyond the adoption of Bitcoin as legal tender, the Government has already conducted other plans. These include creating their wallet and a bonus to encourage the use of the cryptocurrency in the Central American country.
President Bukele has not yet said anything about that information. Sanabria argued that there is no public discussion on this issue or official statement to date.
By Alexander Salazar
