El Salvador and Central African Republic not worried about exchange rate fall

All financial markets were hit hard and the bitcoin price also fell significantly. However, Bitcoin countries El Salvador and the Central African Republic do not seem to be concerned about the price drop for the time being. Both countries have recognized bitcoin as legal tender, making it an official currency of the countries.

The Bitcoins of El Salvador

El Salvador invested in bitcoin at the state level. To stimulate the use of bitcoin, the government of El Salvador offers a bitcoin wallet that makes it easy and free of charge to exchange dollars and bitcoins.

Part of the strategy is for the government to hold bitcoins to ensure rapid conversion between the two currencies. El Salvador has already spent more than $100 million to buy 2301 BTC.

$40 million loss

Critics were skeptical, pointing to the financial risks of volatility. Now that the exchange rate has fallen, some say El Salvador has lost $40 million.

According to El Salvadoran Finance Minister Alejandro Zelaya, that is not correct. “I’ve said it repeatedly: an assumed $40 million loss didn’t happen because we didn’t sell the coins ,” he said at a news conference Monday.

He seems to mean that you can only speak of a loss if you have actually sold at a loss. El Salvador apparently did not do that. A month ago, the country bought another 500 BTC, at the time for an amount of $15 million dollars. The vision seems to be focused on the long term.

Minimal risks

All signals therefore indicate that President Bukele and his government have no plans to throw in the towel for the time being.

“There is clear criticism of bitcoin as such, not of El Salvador’s strategy ,” said Minister Zelaya. “El Salvador is what interests them least. They (the media) are not interested in what happens to our economy, they are not interested in what happens to our people, what happens to inflation.”

The actual risk to El Salvador, he says, is “extremely minimal.” ?ǣWhen they tell me that the fiscal risk for El Salvador is very high because of bitcoin, all I can do is smile ,?ǥ he said, ?ǣAnd I think any serious economist should do the same, because it really is an extremely superficial analysis “.

“$40 million dollars is not even 0.5% of our national budget ,” said Zelaya.

$40 million dollars is not even 0.5% of our national budget Alejandro Zelaya, Minister of Finance of El Salvador

Since El Salvador’s adoption of bitcoin, the El Salvadoran economy has grown by 10.3% and tourism by 30%. The adoption of bitcoin has therefore benefited El Salvador. El Salvador was also supposed to issue bitcoin bonds, but those have been postponed to later this year due to market conditions.

Central-African Republic

There does not seem to be any panic in the Central African Republic either. The country recognized bitcoin as legal tender in April, becoming the second country in the world where bitcoin is one of the two official currencies.

The plans are less advanced than in El Salvador and the Central African Republic does not yet own any bitcoins. Initially, the focus seems to be mainly on attracting investments from the sector and improving the local internet infrastructure.


Despite the tumultuous market conditions, President Faustin-Archange Touad??ra is still positive about the longer-term prospects for his country.

?ǣUnderstanding Bitcoin is critical to recognizing its disruptive power to generate long-term prosperity,?ǥ he tweeted Monday during the fall. “Mathematics is separate from human emotions. Future generations will look back to these moments to (celebrate) our strength and unity in choosing the right path during difficult times #BTC” .?? ??

Touad??ra, himself twice promoted in mathematics, has already expressed his appreciation for the mathematical principles underlying the operation of bitcoin.

Little to lose

Moreover, the Central African Republic has little to lose. It is one of the poorest countries in the world and continuing as before offers little prospects, according to President Touad??ra.

“The formal economy is no longer an option ,” he said last month, “An impenetrable bureaucracy traps us in systems that offer no chance to be competitive.”


If Plan A doesn’t work, then Plan B(itcoin). The Central African Republic therefore opened its doors to the sector and announced ‘Sango’, a special economic zone for bitcoin companies. Even with a lower price, this will probably attract various investments from the sector.

The hope is probably to support the local economy and tourism sector in the first instance, just like in El Salvador. The exchange rate has relatively little impact on those plans.

The price has dropped! What now? Bitcoin may be down, but it is nowhere near dead.

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