El Salvador

El Salvador last week became the first country in the world to adopt bitcoin as legal tender, with the aim of reducing costs in sending remittances, attracting foreign investment and boosting domestic consumption, Market Research Telecast reported. It does so after its parliament approved the cryptocurrency legalization, a law that has not been well received by international organizations and agencies.

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El Salvador's adoption of bitcoin as legal tender has immediate negative implications for it credit rating S&P Global said on Thursday, Reuters reported. S&P said the main risks were that it could threaten its hopes of securing a support programme with the International Monetary Fund, increase fiscal vulnerabilities and hurt banks by creating currency mismatches when they dish out loans. "The risks associated with the adoption of bitcoin as legal tender in El Salvador seem to outweigh its potential benefits," S&P said. "There are immediate negative implications for (the) credit".
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Bitcoin plunged as much as 17% to its lowest level in a month as El Salvador’s crypto rollout got off to a rocky start, Bloomberg News reported. The largest cryptocurrency fell as low as $43,050 in New York on Tuesday, tumbling more than 10% in the course of an hour, before recouping about half the losses. The Bloomberg Galaxy Crypto Index, which tracks some of the largest digital tokens, lost as much as 19% at one point.
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El Salvador on Tuesday became the first country to adopt bitcoin as legal tender, a real-world experiment proponents say will lower commission costs for billions of dollars sent from abroad but which critics warned may fuel money laundering, Reuters reported. The change means businesses should accept payment in bitcoin alongside the U.S. dollar, which has been El Salvador's official currency since 2001 and will remain legal tender.
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El Salvador’s adoption of Bitcoin as legal tender may imply a series of risks and regulatory challenges, International Monetary Fund spokesman Gerry Rice said on Thursday, Bloomberg News reported. “Adoption of Bitcoin as legal tender raises a number of macroeconomic, financial and legal issues that require very careful analysis so we are following developments closely and will continue our consultation with authorities,” Rice said, speaking in Washington.
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El Salvador passed a new law on Wednesday that would make the small Central American country the world’s first to deem bitcoin legal tender, a move that analysts say risks putting its economy at the mercy of the digital currency’s sharp swings, the Wall Street Journal reported. The designation allows bitcoin, the world’s largest cryptocurrency by market value, to be used to buy goods and pay taxes and bank loans. Businesses would be required to accept bitcoin for payment, with the bitcoin-dollar exchange rate set by the market.
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Ratings agency S&P has downgraded El Salvador’s sovereign credit rating to “selective default” after the government missed payments related to its pension debts, the Financial Times reported. The government missed $28.8m worth of payments due between April 7 and April 10 after the country’s Congress failed to approve a budgetary allocation to cover the payments. Assuming a solution is not found, the total owed is set to rise to $55.2m by the end of this month.
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The parent of an aircraft maintenance company spun off by Air Canada is expanding in El Salvador even as its Canadian arm liquidates its assets after terminating more than 2,600 employees, Reuters reported. Aveos, which shut its doors in Canada earlier this week, has corporate ties with El Salvador's Aeroman, with Aero Technical Support & Services Holdings, a closely held company domiciled in Luxembourg, owning both of them. While Aveos may count the Salvadoran unit as part of its network, the two operations are independent of each other, said Ernesto Ruiz, chief executive of Aeroman.
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Ecuador’s default on $3.9 billion of international bonds means it’s only a matter of time before the country drops the U.S. dollar as its currency, Goldman Sachs Group has said, Bloomberg reported. Ecuador’s use of the dollar gives President Rafael Correa no outlet for providing credit to the economy as access to foreign financing dries up and revenue from sales of oil, the nation’s biggest export, tumbles.
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