Salvador’s Labor and Welfare Minister Rolando Castro said the government is currently discussing whether companies should pay salaries in Bitcoin. At the same time, Castro stressed that it is too early to talk about Bitcoin-based wages. Obviously, the reason for this was also the need to take into account the volatility of the main cryptocurrency. In addition, El Salvador’s 2001 Monetary Integration Act includes Article 7, which states that all salaries paid in dollars.
According to Castro, the ministry will make a decision to pay wages in Bitcoin only after legal tender status of BTC becomes law. However, it is still unclear whether the existing law will expand or replace Bitcoin’s acceptance as legal tender in El Salvador.
Nayib Bukele faced with skepticism
Last week, Congress passed by a majority vote President Nayib Bukele’s groundbreaking Bitcoin bill. Making El Salvador the first country to accept cryptocurrency as legal tender.
Merchants will be able to set prices for goods and services in Bitcoin. The dollar will continue to use as the base currency for accounting purposes.
While the country’s decision to accept Bitcoin has been praised by BTC enthusiasts and the crypto community, the move has raised concerns, especially from global financial institutions. The country faced skepticism from corporations and individual politicians. And the IMF even questioned the advisability of El Salvador’s decision to legalize BTC. However, El Salvador continues to push ahead with its Bitcoin ambitions despite skepticism.
Recently, the Central American Bank for Economic Integration (CABEI) announced that it would offer technical assistance to the government of El Salvador in adopting BTC as legal tender.
Economist predicted the collapse of the economy of El Salvador
The use of Bitcoin as a legal means of payment could completely destroy the economy of El Salvador. Johns Hopkins University professor of applied economics Steve Hanke stated this in an interview with Kitco News. Hanke worked as a senior economist during the administration of US President Ronald Reagan from 1981 to 1982.
The economy of El Salvador may “collapse” due to the fact that all American dollars will be withdrawn from the country, by converting them into Bitcoin. In this way there will no money left in the country. Since they don’t have a national currency, the economist claims.
“The big problem with cryptocurrencies in general is that you can’t turn them into a real legal tender that you can use cheaply and quickly”, Hanke explained.
The professor also recalled the high transaction fees. That charged to users when converting Bitcoin to US dollar and vice versa. According to Hanke, this and other reasons will prevent cryptocurrencies from fully using in everyday transactions.