The nations Bitcoin would benefit the most would include Cuba, Paraguay, Brazil, and Costa Rica. The Cuban population has the highest average in the region for sending money home.
Steve Hanke has proved to be one of the most zealous critics of the Bitcoin Law of El Salvador. The American economist disapproves of President Nayib Bukele’s plan of adopting the crypto asset as legal tender.
For the Johns Hopkins University professor, the high costs of remittance transactions do not present any problem for Salvadorans. Data from the World Bank indicate that the fees for remittances from the Central American country are the lowest in Latin America and the Caribbean.
According to a graph Hanke shared, the average cost of sending remittances to El Salvador is lower than in 18 countries in Latin America and the Caribbean. The applied economics professor added that that number is contrary to what Nayib Bukele wants people to believe.
The President of El Salvador spoke about the ease and low cost of sending Bitcoin remittances to the country. He said Salvadorans would save USD 400 million annually by sending remittances in the cryptocurrency instead of the US dollar.
However, Hanke believes that the Bitcoin Law of El Salvador will provide unlimited funding for Bukele’s government plans. He also considers the regulation as unnecessary, whimsical, and very unpopular.
Sending Remittances in Bitcoin Would Benefit Cuba and Paraguay, among other Countries
The graph Hanke shared shows a cost of sending remittances to El Salvador lower than that of 18 countries in Latin America and the Caribbean. That diagram also reveals that those nations can take more advantage of Bitcoin than the Salvadoran territory.
In 2020, Cubans, Paraguayans, Brazilians, and Costa Ricans spent between 6.60% and 10.53% on fees. According to the economist’s calculations, those are the highest averages in the region for sending money.
Peru, Bolivia, the Dominican Republic, and Colombia are among the 16 nations with an average fee expense above 4%. The costs for sending remittances are lower only in El Salvador, Guatemala, and Panama.
In both Cuba and El Salvador, the primary source of income for citizens is remittances. They arise as a result of the efforts of many expatriates to send money to help their relatives meet basic needs.
Making cross-border transfers is faster and cheaper and does not require resorting to high-cost traditional services. However, the widespread use and adoption of Bitcoin in these countries could face technological barriers.
Contrary to what Hanke stated, the Bank of America believes the adoption of Bitcoin will bring four advantages to El Salvador. Those benefits are remittances, financial digitization, more options for consumers, and the ability to do business with foreign companies.
All those advantages can also have a positive impact on other countries in Latin America and the Caribbean. As for Jamaica, Haiti, and Suriname, they are among those nations with high fee costs of sending remittances through traditional services.
By Alexander Salazar