To support the new Bitcoin law, the El Salvador legislature has decided to create a $ 150 million fund. The money came from the reallocation of a loan that was meant to stimulate the economy.
On September 7th, a law came into force in Central American El Salvador that raised Bitcoin to legal tender status. We have already reported several times that part of the population is anything but enthusiastic about it. But this does not concern the government. The Legislative Finance Committee has now approved a $ 150 million trust fund to support President Nayib Bukele’s plan. The Development Bank of El Salvador (BANDESAL) appears as the trustee of the fund.
A report in the Salvadoran newspaper Diario de Hoy according to the proposed amount could even increase. According to the report, parliamentarians also approved a reform of the state budget in 2021. The reform allows $ 500 million to be diverted from a loan from the Central American Bank for Economic Integration (CABEI), which was originally intended for the economic recovery of small and medium-sized businesses.
Government of El Salvador advertises Chivo-Wallet with a bonus
On the day the new law goes into effect, El Salvador will also introduce a wallet called Chivo. It simplifies transactions and the exchange of the current national currency, the US dollar, into Bitcoin. The government announced the trust fund back in June. He is providing funds to cash out the $ 30 bitcoin bonus that citizens receive when they sign up for Chivo. President Bukele has stressed that El Salvador’s citizens are by no means forced to download the app. In addition, the government is setting up 200 ATMs (Cajeros Chivo) to support Bitcoin transactions.
According to a current estimate, only around 50,000 residents of El Salvador currently own Bitcoin, which makes up just 0.8 percent of the population. The Bukeles initiative is set to increase that number to 4 million, according to one Government announcement. However, it is not clear from this whether this number includes only active users of cryptocurrencies or all people who would sign up for the Chivo wallet.
But the government of El Salvador is not only trying to allay the concerns of the population through the USD 30 bonus. Opponents of the law include retirees, veterans and workers who are concerned that their pensions could be paid out in Bitcoin. For them, the volatility of Bitcoin is a major factor of uncertainty. However, the government made it clear that salaries and pensions will continue to be paid in US dollars. The prices for goods and services also remain expressed in the world reserve currency.