“One thing I've always admired about Steve Jobs is that he never looked at Apple's stock price. He knew where his company was headed. The stock market will add when he gets it.” Nayib Bukele, the president of El Salvador, retweeted last Thursday, in the midst of bitcoin's free fall, what he said a year ago, when numerous experts questioned the adoption by this small Central American republic of this cryptoactive as legal tender in August 2021 and deployed a wide network of ATMs both in El Salvador and in the United States. A mechanism so that Salvadorans inside and outside the country can exchange bitcoins and dollars indistinctly and send remittances without any type of commission.
Although, beyond grandiloquent statements, the president kept two aces up his sleeve to strengthen his confidence in this unregulated asset. On Monday he announced that the country had just made its largest purchase of bitcoins taking advantage of its devaluation. Specifically, 500 for about 15 million dollars. And on Tuesday he presented the first model and artistic images of Bitcoin City, the tax-free city where all transactions will be carried out in this currency that was announced in November of last year, shortly after the approval of the law for the Creation of the Bitcoin Trust by part of the Legislative Assembly.
However, the image of normality and optimism that Bukele tries to spread – a young businessman from the revolutionary Farabundo Martí National Liberation Front who has embraced technological populism – contrasts so much with the mistrust that Salvadoran society has shown towards the use of technology. bitcoin and the strong pressure from institutions such as the World Bank or the IMF, which has urged the Salvadoran government to renounce its policy of adopting crypto assets after various rating agencies such as Moody's or Fitch have lowered the quality of its debt to its lowest levels.
The problem is not so much the weight of bitcoin in the Salvadoran economy as the mistrust that Bukele's policies offer. In fact, the country would add just over 2,300 bitcoins in its portfolio, according to the information of the ten operations that have been carried out since its adoption that Bukele himself has offered through social networks, since the Government has not offered data concrete. An amount that at the current exchange rate is equivalent to less than 70 million dollars. The debt to be paid in the short term, however, amounts to 800 million dollars.
"The adoption of bitcoin has not had a major financial or economic impact due to the low preference revealed by the vast majority of economic agents," explains Roberto Morán, dean of the Faculty of Economic Sciences at the Francisco Gavidia University in San Salvador. Salvadorans, inside and outside the country, maintain their preference for the dollar, and financial institutions have not granted loans in crypto assets and their assets and liabilities are held only in dollars.
A study by the Public Policy Observatory of that university has revealed that eight out of ten Salvadorans consider the Government's proposal to establish bitcoin as legal tender to be little or not at all correct, and 65% are not willing to receive their salary in this cryptoactive. . The National Bureau of Economic Research, for its part, pointed out that barely 20% of salvadorans had downloaded the Chivo Wallet application in 2021, which allows access to the monetary transaction system and the $30 in bitcoins that all Salvadorans have received. registered. Most of those who have done so have exchanged their bitcoins for dollars at the system's ATMs and have not used the app again, according to this international organization.
The strong instability of the crypto market these days has further destabilized the model that Bukele is trying to implement. Especially outside doors, where the lack of confidence has definitively weighed down the Salvadoran debt and its external financing capacity. A situation that not even remittances can save. The expansionist policies of the Salvadoran government and its relentless fight to put an end to the scourge of the gangs, which had established a solid mafia structure in the country, have meant that remittances from the United States do not cover the trade deficit either, as was the case happening.
According to the Observatory of Public Policies, until last March, 1,800 million dollars had entered El Salvador in remittances –by the way, only 29 of them, 1.6% of the total, in bitcoins–, while the commercial deficit already amounted to 2,460 million, according to data from the Central Reserve Bank of El Salvador. The Government insists that there is no risk of falling into default and that it will not modify its policies on bitcoin. Although to solve the problem that is upon him, he will not resort to that new economy that he proclaims, but to one of the formulas of the old economy: take the scissors and reform his pension system.
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