The BofA “bullish on the macroeconomics of El Salvador”
After announcing his desire to adopt Bitcoin (BTC) as legal tender in his country, President Nayib Bukiele has placed El Salvador under the spotlight, especially in the crypto-sphere.
This Sunday, August 1, Bukele shared via Twitter excerpts from an analysis report on the economic outlook from the Bank of America (BofA) on the Central American country.
“We believe that the assertiveness with which the Bukele administration conducts its policies could be an asset – not a liability – for the economy.”
– @ BankofAmerica’s analysis on El Salvador. pic.twitter.com/4XM8n3K3c1
– Nayib Bukele 🇸🇻 (@nayibbukele) August 1, 2021
The BofA explains “being optimistic” about the economic future of El Salvador and has even revised upwards its forecasts for the country’s growth for the current year. She estimates that “2021 will probably have the highest growth rate in the country’s history,” and envisages no longer 6%, but 12% increase in GDP.
👉 To read on the same subject – Salvador: the “Bitcoin Law” adopted, the country becomes a crypto-nation
Breathing new life into El Salvador’s economy
The second largest bank in the United States is convinced that making Bitcoin the legal tender of El Salvador will revolutionize the economic and social life of the country. This will make it more economically attractive and should encourage foreign investment.
“The adoption of bitcoin could also bring foreign direct investment (FDI) flows to El Salvador. There could be FDI from Strike (the developer of the payments platform), bitcoin miners, ATM manufacturers and many other types of businesses, ”the report said.
At the time of writing, the first foreign investments are starting to arrive in El Salvador. Last June, the Athena company announced its desire to install 1,500 Bitcoin distributors in the country. This has already started the first phase of work, which provided for the deployment of 14 ATMs.
Bitcoin mining is also seen as a real opportunity to bring businesses back to El Salvador. At the beginning of June, Nayib Bukele had already tried to take advantage of the geothermal wealth of the country to attract miners, in a context where the activity was criticized for its polluting characteristic.
And a revolution for its people
BofA is aware of how cross-border remittances could evolve with the use of Bitcoin. Currently, the average fees are estimated at around 10% for Salvadorian users, but “the use of Bitcoin could help reduce them”. For the government of the Latin American country, this subject is essential. Indeed, foreign trade represents almost 24% of El Salvador’s gross domestic product (GDP).
“If the use of Bitcoin does reduce transaction costs, then for every dollar Salvadoran expats send home, more of that dollar could be received by recipients, which would increase their disposable income and reduce the proportion. transfers of lost funds by financial intermediaries, ”explained BofA analysts.
Finally, the report indicates that more than 70% of the country’s adult population does not have access to a traditional banking system. As a result, Bitcoin could allow the “banking of unbanked people” by providing them in particular with access to electronic payments.
👉 On the same theme – Salvador: salaries could be paid in Bitcoin (BTC)
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About the Author: Lilian Aliaga
Freelance writer located between Paris and Toulouse. I want to share my passion for the world of cryptocurrencies with as many people as possible. I am also interested in technical analysis and trading.
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