El Salvador’s finance minister defended the country’s strategy to adopt Bitcoin as legal tender even as critics urge the nation to ditch the experiment as the cryptocurrency world suffers through a bear market.
Almost a year into the country’s bet on Bitcoin, Alejandro Zelaya said the digital currency has brought financial services to a largely unbanked population and attracted tourism and investments. While its use as a means of exchange is low, he said he remains a believer in digital money and added the government is still planning to issue a Bitcoin-backed bond using blockchain technology.
“For some, it’s something new and something they don’t entirely understand, but it’s a phenomenon that exists and is gaining ground and will continue to be around in the coming years” Zelaya said in an interview on Wednesday.
The government has purchased 2,381 Bitcoin with public funds, which, today, are worth about 50% less than what authorities paid for them, according to calculations by Bloomberg based on tweets by President Nayib Bukele. A survey by the U.S. National Bureau of Economic Research found that most businesses and consumers in El Salvador still prefer to use hard currency to pay for goods and services and send remittances. The International Monetary Fund has urged the nation to strip Bitcoin of its legal standing. The government is negotiating a $1.3 billion extended fund facility with the IMF, but no deal has yet been reached.