“Bukele has considered the dedollarization of El Salvador”

It was in January 2001 when Salvadorans welcomed the new year with the news that the dollar would be the official currency along with their local currency: the colón. Over time, the US currency became the only one in circulation. 23 years have passed since that date and several presidents have considered de-dollarization of the country. Nayib Bukele is no exception.

This was confessed by the Salvadoran vice president, Félix Ulloa, in an interview with the Russian network RT. He did it a few days ago during his stay in the Asian country to attend the Saint Petersburg International Economic Forum. When asked about Bukele’s projects, the vice president took the opportunity to reveal his desire to move away from the dollar.

He admitted that the government has studied de-dollarization on several occasionsalthough he clarifies that when evaluating the situation they have come to the conclusion that Such a decision would entail a higher cost, especially “in case you think about using the colon again.” That is why Bukele’s goal is to achieve independence from all fiat currencies.

We want to have economic and financial liberalization, especially of the governing bodies of the central banks, independence of fiat currencies, including the dollar, the euro, the free sterling, all fiat currencies. That is why bitcoin has become an option.

Félix Ulloa, vice president of El Salvador.

When asked about the potential of the digital currency to achieve the goal, Ulloa highlighted bitcoin as the alternative that exists to achieve the independence of all fiat currencies.

“We want to have economic and financial liberalization, especially regarding the governing bodies of the central banks,” says the vice president, recalling that bitcoin is a decentralized currency that does not respond to the guidelines of any central bank.

In this way, the official presented the economic vision that will support Bukele’s actions during the second term that began this June 1, which will focus on the economy. It also reaffirms the government’s conviction to maintain bitcoin as currency and seek foreign investment as ways to boost Salvadoran finances.

As reported by CriptoNoticias, the vice president’s visit to the Asian giant occurs within the framework of Bukele’s rapprochement with Russia.. This, as part of a plan to obtain investments, which will increasingly separate it from the United States.

The rapprochement occurs in a geopolitical context in which The Russian government promotes a global de-dollarization process (along with China), in order to face the sanctions imposed by the West due to the war with Ukraine. The Asian country stands out for making strategic alliances with countries that encourage the use of alternatives other than the US currency.

In fact, the Russians have managed to maintain their trade using local currencies, and now more than 90% of trade with China runs in yuan and rubles, as indicated by President Vladimir Putin. Additionally, as a member of the BRICS bloc, the country supports the development of a new payment system based on CBDC.

Russia has also expressed some interest in bitcoin. Legislators have debated laws intended to turn mining into an economic activity; They are even preparing a project that allows “exporting cryptocurrencies.” There was even thought about using BTC for international payments. But so far no bill has been passed.

El Salvador and the difficulties of dedollarization

Taking into account Putin’s actions regarding de-dollarization, it is striking that Ulloa has spoken openly in Russia about Bukele’s aspiration to move away from the dollar.

In that sense, it is worth remembering that until now the president had not expressed his intentions for de-dollarization so openly. It happened during the situation generated by the Covid pandemic between 2020 and 2021, when Salvadorans faced a health crisis and There were rumors about the possible elimination of the dollar.

At that time, the government, through statements by the now former Minister of Finance, Alejandro Zelaya, denied that de-dollarization was being considered.

«There is no discussion or planning. “Doing that would be catastrophic,” said the official. A conclusion that most economists have reached – who, like Ulloa – assure that It would be much more expensive for the country to return to use the local fiat currency.

However, the comments grew louder in mid-2021, with the passage of the Bitcoin Law. That was when the currency created by Satoshi Nakamoto emerged as a financial alternative. The appearance of BTC on the scene was also understood as a way to de-dollarize. A path that is still open for the Bukele government, despite the difficulties that the adoption of cryptocurrencies has faced in El Salvador.

As several of the governments that have thought about de-dollarization during these 23 years have evaluated, “the dollarization of El Salvador looks like a dead end.” However, like the current president, many are thinking about options that allow, in the long run, to move away from the dollar.

Oscar Cabrera, former president of the Central Reserve Bank and current president of the Foundation for the Development of Central America (FUDECEN), declared the following: «dollarization was a measure not agreed upon with society at the time and approved by a simple majority, therefore that it would be worth it open the debate about what the country needs now«.