El Salvador announces plans to use Bitcoin as legal tender

Credit: Andrew Harrer/Bloomberg

El Salvador's president Nayib Bukele says he will make the Bitcoin cryptocurrency legal tender in the country.

He said, the move will "generate jobs and help provide financial inclusion to thousands outside the formal economy".

The cryptocurrency could also be "the fastest growing way" to transfer remittances - or money sent home from abroad.

He said he would send the legislation to congress next week.

Should it pass, the move would open up financial services to the 70% of Salvadorans who do not have bank accounts, the president said.

El Salvador's economy relies heavily on remittances, or money sent home from abroad, which make up around 20% of the country's gross domestic product (GDP).

Mr Bukele, who has maintained approval ratings above 90% since taking office in 2019, tweeted a large chunk of the $6bn El Salvador nationals living abroad currently send home each year is "lost to intermediaries".

More than two million Salvadorans live outside the country, but they continue to keep close ties to their place of birth, sending back more than $4bn (£2.9bn) each year.

Bitcoin, a virtual asset with no direct connection to the real economy, has seen large fluctuations in value over the years.

Most of the world's central banks are looking into the possibility of creating their own digital currencies. In April, the Bank of England announced it was looking into creating a digital money that would exist alongside cash and bank deposits.

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