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Bank of America says bitcoin adoption could help El Salvador's economy in some ways. - Chaintimes.com

source-logo  chaintimes.com 02 August 2021 09:42, UTC

According to the Business Insider report, Bank of America has said that there are more risks than potential benefits to El Salvador’s adoption of bitcoin as legal tender. The bank’s analysts said in a note last week that there could be a number of benefits, including making it easier for migrants to send money back to El Salvador, helping digitize banking, and increasing business with the US.

Bitcoin could benefit the economy by lowering transaction costs on remittance.

Bank of America’s analysts, including Latin American strategist Claudio Irigoyen, wrote, “The market has been excessively pessimistic about it and is overlooking any argument in favor, even if those benefits are admittedly more uncertain.” Like many developing countries, remittance flows are worth a substantial amount to El Salvador’s economy, at 24% of GDP, due to workers leaving the country and sending money home. The bank bitcoin could benefit the economy by lowering transaction costs on remittances to the Central American country. Many global regulators had earlier criticized El Salvador for its bold move to authorize bitcoin as an optional legal tender.

Bitcoin adoption could increase business with US firms. 

According to the report, more than 70% of El Salvador’s adults don’t have a bank account, BofA said. But bitcoin is a form of digital money that can be easy to use through mobile phone apps. “For that reason, democratizing access to electronic payments, through bitcoin, has a progressive touch,” the bank’s analysts said. The US is a crypto hub, and El Salvador’s authorization of bitcoin as a legal tender could see American firms move into the country to take advantage of the change – and bring investment with them.

chaintimes.com