In a statement to clients last week, Bank of America, one of the world’s major banks, expressed support for El Salvador’s Bitcoin bill.
It comes as the government faces criticism from many international organisations for allowing citizens to accept Bitcoin as a form of payment for products and services as well as outbound remittances.
In a research note, Bank of America stated: “Using Bitcoin for remittances could potentially reduce transaction costs compared to traditional remittances channels”
“If using Bitcoin lowers transaction costs, then a higher share of every dollar sent home by the Salvadoran diaspora might be received by recipients, increasing their disposable income and reducing the proportion of remittances lost to financial intermediaries,” it continued.
Some of the advantages of certifying Bitcoin as legal money, according to Bank of America, are as follows:
- El Salvador’s intentions to mine Bitcoin using geothermal energy from its volcanoes might stimulate the development of cost-effective, clean, and renewable energy centres for the controversial industry, which could also help attract foreign investment.
- Bitcoin has the potential to cut the cost of remittances, which account for one-fifth of El Salvador’s GDP. This could also suggest that citizens have a little more disposable income.
- Because 70% of El Salvador’s inhabitants lack access to a bank account and financial services, Bitcoin could alleviate some of the difficulties associated with opening and maintaining a bank account.
- As global players bet on the ecosystem’s growth, embracing Bitcoin might bring even more foreign direct investments (FDI) into the country.
- The adoption of Bitcoin can help to initiate “financial digitization” and give “progressive” access to electronic payments.