Bank of America (BofA), one of the largest banks in the US, believes El Salvador has a lot to gain from its decision to adopt Bitcoin.
In a report shared by El Salvador’s President Nayib Bukele to a state-owned publication, BofA highlights the four key upsides to the country’s Bitcoin adoption.
The bank says that remittances make up a large 24% chunk of El Salvador’s gross domestic product (GDP). The financial giant cites data from the Bank for International Settlements (BIS), which notes that roughly 10% of the remittance money is lost to financial intermediaries.
“Using Bitcoin for remittances could potentially reduce transaction costs compared to traditional remittance channels. The idea is that Bitcoin could be used as an intermediary for the cross-border transfer so that dollars are converted to Bitcoin by the sender and then converted back to dollars domestically by the receiver...
If using Bitcoin indeed lowers transaction costs, then from every dollar that the Salvadoran diaspora sends home, a greater portion of that dollar could be received by its recipients.”
Additionally, BofA says Bitcoin can enable the digitization of financial services, bringing more financial accessibility to the country as 70% of its adult population is unbanked.
Adopting Bitcoin also potentially brings greater consumer choice to El Salvador, according to the banking titan.
“One could make the case that adopting Bitcoin as legal tender is about giving more choice to consumers, embracing innovation and doing more business with American companies.”
Lastly, BofA says bringing Bitcoin to El Salvador could enable the country to receive more business from US-based firms and potentially attract more BTC miners to the country.
“Bitcoin’s adoption could also bring FDI (foreign direct investment) flows into El Salvador. There could be FDI from Strike (developer of payments platform), Bitcoin miners, ATM manufacturers, among other types of firms.”
In June, El Salvador became the first country in the world to adopt BTC as legal tender after the Bitcoin Law was approved by a supermajority in Congress.
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