Conventional money managers remain skeptical of El Salvador’s chances of creating a new economic paradigm through a Bitcoin (BTC) bond issuance. Other countries are taking a keen interest in the Central American nation, however, considering following suit if El Salvador’s decision to adopt BTC as legal tender last year bears fruit.
In a Financial Times article, Kevin Dalyportfolio manager for the investment company Abrdnsaid that to their surprise, the words of the Salvadoran Minister of Finance, Alejandro Zelayasuggest there is a demand for up to $1.5 billion for Bitcoin bonds – which will be used to build a new tax haven for international crypto industry advocates and pioneers.
Either way, Mr Daly – like many others quoted in the article – claimed the show was “a faux pas” on the part of the government. He felt that El Salvador were somehow floundering and said:
“If the government chooses to print $1 billion, we’re all going to wonder if they’ve lost their minds.”
investment companies Meketa Investment Group and NEPC also said demand would be “likely moderate” in the institutional investment sector, “including pensions and endowments.” These companies believe that “retail investors and cryptocurrency enthusiasts” would get “the lion’s share.”
As indicated, the rating agency Fitch has already downgraded El Salvador’s sovereign credit rating from B- to CCC. The agency says the adoption of Bitcoin as legal tender could jeopardize a possible $ 1.3 billion funding program from the International Monetary Fund (IMF).
However, Salvadoran President Nayib Bukele reiterated his faith in bitcoin – and took a contradictory stance in the face of such “cautious” warnings from the IMF and other organizations like the world Bank.
Anyway, the author notes that Bitcoin is not considered a “speculative asset” in “emerging countries”, where “the emphasis is on transactions”.
The article cites Lord Fusitu’aformer MP, who “seeks to introduce a bill to make Bitcoin legal tender in Tonga as early as February 2023”: “our biggest and most lucrative export is our people. any commodity.”
Meltem Demirorsthe chief strategy officer of the crypto-asset management firm CoinShareswas quoted as stating:
“El Salvador is a textbook case for other developing countries that depend on the World Bank and the IMF for their financing.”
Nations with weakening fiat currencies and large overseas-based communities sending remittances to home-based families have been identified as potential BTC users and are following events in El Salvador with interest.
Earlier this month, the government discussed a series of legal reforms aimed at laying the foundations for the implementation of these bonds, as well as a possible issuance as early as March 20. These plans have not materialized, but Mr. Bukele and his ministers may be waiting for a more opportune time to launch them.
Much of the demand for bonds is expected to come from abroad. But with the conflict in Ukraine making global headlines, Mr Bukele probably thinks it would be wiser to wait.
Either way, as diplomatic relations between El Salvador and Washington grow increasingly strained, the president, who may well be looking to de-dollarize his economy, took the time to post on Twitter over the weekend. end, a spade aimed at American financial officials.
The “bitcoiner” and investor Anthony Pompliano at writing that bond issuance “seems to be setting the stage for a revolution in sovereign debt markets.”
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