El Salvadors president, Nayib Bukele, may be Bitcoins most visible publicist. Since Bukele assumed the presidency on June 1, 2019, his first-mover, grandiose plans for Bitcoin in El Salvador have generated buzzand a litany of failures.
In 2001, long before Bukele arrived on the scene, El Salvador phased out its domestic currency, the colón, and introduced a dollarized competitive-currency regime, one in which the dollar was legal tender, but any other currency could be used. Since then, the country has rediscovered economic stability.
Annual inflation has averaged just a hair over 2 percent since 2001the lowest in Latin America over that period. Economic growth has outpaced the Latin American average, and exports have risen steadily and at a faster rate than most countries in the region. Currency instability and inflationplagues on the houses of all too many emerging-market countries, including Argentina, Lebanon, Syria, Venezuela, and Zimbabwe, to name a fewhave been irrelevant in El Salvador. Indeed, from a currency perspective, theres no difference between El Salvador and New York, Texas, or California. Dollarization has worked like a charm.
Enter Bukele. On September 7, 2021, he put his Bitcoin mania into practice. He implemented what was, and remains, a highly unpopular Bitcoin law. It was billed as a law that would make Bitcoin legal tender throughout El Salvador. To implement Bukeles Bitcoin law, the Salvadoran government designed and launched an app, the Chivo Wallet. It was intended to facilitate transactions in Bitcoin. Salvadorans were encouraged to download the app. Indeed, doing so was accompanied with a $30 gifta significant sum, nearly half of El Salvadors weekly GDP per capita. Bukele claimed that the law would lower the cost of remittances to El Salvador and would improve the countrys financial inclusivity.