Financial institutions will continue to process credits and deposits in the US fiat currency. According to analysts, people will continue to pay for imports and exports in US dollars.
In recent days, the Salvadoran Banking Association, Abansa, announced that it will continue to use the US dollar rather than Bitcoin for accounting purposes. The country’s financial institutions will use the US fiat currency as a reference for deposits and credits among their users.
This union, composed of 11 banks, considers that the authorities must work in coordination to apply the new law properly. Abansa is worried that promoters of Bitcoin as legal tender must respond to concerns about the measure.
“Abansa urges the authorities to work in coordination to apply the law properly. Since it is an innovative topic, the State must create financial education programs on the use of this type of instrument,” the organization highlighted.
Abansa Seeks to Contribute to the Development of the Bitcoin Law
Regarding the adoption of Bitcoin as an alternative to the US dollar in El Salvador, the association said that it does not reject the measure. On the contrary, the group seeks to contribute to the development of regulations and “operating models” that support the objectives of the law.
Bankers are aware of the progress of the regulations and expect to learn the technical considerations about Bitcoin. Besides, they told the National Assembly that it is necessary to adequately manage the risks associated with these projects that involve innovation.
El Salvador’s President Nayib Bukele announced a measure to allay fears about Bitcoin’s volatility. He reported that the Development Bank would ensure the free convertibility of the cryptocurrency in the country. The State would always assume the risk as it would do so through a trust fund of USD 150 million.
The Use of the Dollar Will Continue Alongside Bitcoin in El Salvador
The use of Bitcoin as legal tender in El Salvador would have a local reach, according to economist and analyst Carlos Acevedo. The former president of the Central Reserve Bank (BCR) of the Central American country believes that payments for imports and exports will continue to be in US dollars.
“People will pay for exports and imports with US dollars. Suppliers will also require payments in the US fiat currency. The only exception would be when a company selling its products to El Salvador accepts payments in Bitcoin. However, Bitcoin is not the means of payment for international trade,” Acevedo told local newspaper El Salvador.
What the former president of the BCR referred to and what Abansa thinks about it is in line with Miguel Kattán’s recent statements. The Secretary of Commerce and Investment explained that El Salvador will not substitute the dollar for Bitcoin but will use it as a payment alternative.
Although El Salvador would use Bitcoin as legal tender in a localized way, it is open to accepting it as an alternative means of payment. Many importers and exporters hope that Bitcoin can become a payment method for their negotiations. That reaffirms once again the relevance of the pioneering cryptocurrency in the global economy.
By Alexander Salazar
