El Salvador’s government intends to establish a native cryptocurrency that the public will be able to use to pay for services, according to San Salvador-based media outlet El Faro on Friday night.
Ibrajim and Yusef Bukele, the brothers of the country’s president, Nayib Bukele, informed prospective investors that the cryptocurrency, now known as the ‘Colón-Dollar,’ might be released by the end of 2021.
As mentioned in the article, which also included video recordings of the brothers discussing the plan with these investors, the brothers stated that they represented the president.
El Faro has over two hours of footage from virtual meetings alongside documents registering Ibrajim and Yusef, negotiating on behalf of the Salvadoran government.
The Colón-Dollar, the Salvadoran government’s stablecoin, would be produced by the Central Reserve Bank, backed by a reserve of US dollars, and connected with the government wallet, Chivo.
In order to encourage its usage, Ibrajim indicated in his meeting with stablecoin specialists on June 4 that the government will begin by creating a reserve of dollars to support the Colón-Dollar.
The announcement comes only weeks after the Central American nation’s government unanimously passed the president’s Bitcoin (BTC) law, making the original cryptocurrency legal tender and requiring all companies to accept it as payment for products and services.
A government spokeswoman in El Salvador informed the Latin American news outlet that the proposal had been “discarded.” However, the publication, citing an anonymous source, stated the preparations are still on track.
A key element of monetary policy
The action would restore the country’s ability to issue national currency, which it lost when it joined the US Dollar in 2001.
However, Steve Hanke, a Johns Hopkins University Professor of Applied Economics, has cautioned that El Salvador’s decision to accept Bitcoin as legal tender could have ramifications, labeling the action as economic stupidity.
Even though Bitcoin has been recognized as legal money, it may not serve the original goals. Hanke considers it ridiculous to make cryptocurrencies legal tender when most citizens lack access to bank accounts.