El Salvador repaid its $800 million bond despite accepting Bitcoin
El Salvador’s President Nayib Bukele stated on Tuesday, January 24, that the government has fully serviced its $800 million bond with interest due on the same day. He also confirmed it on his Twitter account.
Important to note that El Salvador’s credit ratings have been cut to reflect a considerable risk of default.
El Salvador adopted a bitcoin legal tender in September 2021, drawing harsh condemnation from international banking institutions. However, the criticism became louder as El Salvador purchased more bitcoins, causing the value of the assets to fall. However, this did not prevent El Salvador from facing criticism.
Nowadays, the government holds around 2,516 BTC. The Government has placed a bet on the cryptocurrency. For that, it should increase cryptocurrency awareness among its citizens. By 2022, the country will have educated over 10,000 people about cryptocurrency, including bitcoin.
Signal for others
The repayment of the bonds is also a strong indicator for investors since it shows the country’s ability to meet its financial obligations. In other words, investors are more inclined to invest in El Salvador in the future if they believe the government is financially sound.
Finally, El Salvador’s repayment of the $800 million bond shows that the country is dedicated to managing its financial system through a combination of traditional finance and cryptocurrency. This might create a precedent for other governments to follow as they seek methods to balance the usage of traditional and digital currencies.
Of course, this does not imply that bitcoin is a panacea for all current problems. However, other nations’ experiences can offer some insight into how cryptocurrencies can be integrated into the financial system.
Challenges of bitcoin country
The bitcoin legislation was supposed to remedy a variety of issues when it came into force in September 2021. Many prices, for example, are now listed in BTC in addition to the US dollar’s official currency status, taxes may be paid in bitcoins, and the exchange of dollars for this cryptocurrency is tax-free.
Nonetheless, the Bitcoin Law largely supported cryptocurrencies to rejuvenate the country’s financial life since over 70% of the population lacks access to traditional banking services. As a result, even Chivo, a national cryptocurrency wallet with a 0% fee, hardly changed the situation.
El Salvador intended to enhance access to financial services for its population by accepting Bitcoin, particularly for those who are unbanked or underbanked. But due to the current market sentiments, its promises seem quite dull.
