El Salvador is in a fix after Bitcoin’s losses and crashes. After all, it had been the first country to hail cryptocurrency as legal tender.
Bitcoin would exist alongside the U.S. dollar, thereby achieving overnight fame. However, things have not gone the way that the small, North American country visualized they would. Therefore, after watching Bitcoin going downhill over the last few weeks, the President, NayibBukele had invited delegates from 44 other nations to a conference. The agenda would focus on Bitcoin and other financial issues that El Salvador is currently confronting Visit at: https://www.bitcoin-prime.cloud/
The meeting took place on May 17, at Gautemala. Amongst the delegates were representatives from 32 central banks too. Representatives from financial establishments were majorly from Nigeria. The Central African Republic (CAR) had adopted Bitcoin as legal tender in April 2022. It indicates that despite BTC’s highs and lows, it still carries much favor in varied nations. They are just waiting for things to settle, before making final decisions. The conference would also discuss the highs and lows involved with large and small businesses. The attendees would have to remain for three days, in order to cover all the topics listed for the conference.
Why Did El Salvador Adopt BTC as Legal Tender?
There were several reasons why the El Salvador parliament approved BTC’s legalization in Jun3 2021. To begin with, President Bakule desired to present himself as a progressive individual to the world. He also wanted everyone to have a good opinion of El Salvador. Another reason was the nation’s heavy dependency on the U.S. dollar. With this move, the country would be able to bring down the cost of monetary transactions, encourage domestic consumption, and would attract a larger number of foreign investments.
Although the decision was taken long ago, the Government enforced it only several months later. A special application also entered the picture, enabling citizens to go in for unlimited transactions. This application was the Chivo app. Unfortunately, the app has been giving problems to users. It is not very user-friendly. Furthermore, security devices are not compatible with it. Then again, the app fails in the arena of updating. Above all, since it BTC is a non-fiat currency, no central bank is offering it backing or support. It does not help that BTC is undergoing price fluctuations either. Thus, El Salvadorians are not at all happy with what is happening. Payments, once made, may not be reversed. Credit agencies are worried about the nation’s creditworthiness. In fact, loans may attract greater rates of interest now.
All these issues were brought up at the conference. However, it has not been possible to come up with valid solutions for them. El Salvador alone, cannot control what is happening.
Disadvantages of Making Cryptos Legal Tender
Seeing El Salvador experiment with BTC, several nations might have been tempted to do the same, and for the same reasons. However, investors place their savings at risk, when they participate in such schemes. With no backing for these savings, naturally, they are wary of going the cryptocurrency way. Financial establishments still feel that widespread usage of cryptos could destabilize a nation’s economy. Every aspect must be carefully investigated, before bringing regulations and apps into the picture. Similarly, governments could be exposed to the risks of higher exchange rates. Therefore, mere speculation will not help in the case of adopting cryptos as legal tender. All economic activities connected with them must be weighed carefully, before making important decisions.
Conclusions of the Conference
All the delegates suggested the construction of a solid fiscal policy, to tide over the existing crisis. There would have to be fiscal reforms and the elimination of fiscal risks. The delegates also urged the enhancement of private investments and productivity. Some measures would be the fostering of economic diversification, the lowering of energy expenses, the diversification of the energy matrix, and an increase in financial inclusions. Steps would also have to be taken to reduce red tape and crime and increase security measures, especially with the app. It would be necessary to peruse various projects and their infrastructures, etc. Whatever is the case, it is up to the President and the parliament of El Salvador to work out how best to recover from the economic challenges confronting them.
However, this is not all. El Salvador plans to host more of such meetings/conferences, this year, and even the next year. It also plans to invite the same delegates, and even new ones, believing that cryptos belong to the world. Therefore, everyone must be kept in the big picture, and advise one another. For investment and trading check Bitcoin smart.For investment and trading check Bitcoin smart.