El Salvador: an analysis of the monetary integration law and the bitcoin law

Sergio Náñez Alonso, Miguel Ángel Echarte Fernández (), David Sanz Bas () and Cristina Pérez Rico ()

Brazilian Journal of Political Economy, 2024, vol. 44, issue 1, 189-209

Abstract: The objective of this article is to analyze the two most important monetary lawsthat have been implemented in El Salvador, namely the Monetary Integration Law (MIL)and the Bitcoin Law. The most important articles of both laws will be analyzed, as well asthe consequences of dollarization, and the possible advantages and risks associated with theadoption of Bitcoin as legal tender. Although this measure may have some positive aspectsby encouraging financial innovation and facilitating remittances, the macroeconomic riskis very high due to the volatility of this cryptocurrency. So far no positive results have been achieved as the acceptance has been very low and there has been a depreciation of the assetin recent months. JEL Classification: E40; E42; E44; E52; E58.

Keywords: Dollarization; volatility; currency stability; remittances; inflation; cryptocurrency (search for similar items in EconPapers)
Date: 2024
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