Publications
Publications
- October 2024
- HBS Case Collection
El Salvador: Launching Bitcoin as Legal Tender
By: Laura Alfaro
Abstract
Teaching Note for HBS Case No. 322-055. In June 2021, Nayib Bukele, El Salvador’s president, surprised the world with the announcement that the country would adopt bitcoin as legal tender, becoming the first nation to do so. Bitcoin was mostly used for trading and had one of the most volatile track records among assets. Yet, crypto adoption as a medium of exchange was starting to gain pace worldwide. Bukele claimed it would be a boon for financial inclusion, investment, innovation, and economic development. El Salvador´s $27 billion economy suffered from persistently low growth, high public debt, and a strong dependence on remittances, which could potentially become cheaper and faster to access in bitcoins. The Bitcoin plan was met with both enthusiasm from Bitcoin supporters and skepticism from credit agencies and multilateral finance institutions, which believed it could bring macroeconomic instability to the local economy. Was bitcoin a viable currency for Salvadorans? Or, as some observers pointed out, was Bukele's plan another sign of weakened governance in his administration?
Keywords
Bitcoin; Cryptocurrency; Currency; Financial Strategy; Economic Growth; Governance; Macroeconomics; Assets; Government Administration; Latin America; El Salvador
Citation
Alfaro, Laura. "El Salvador: Launching Bitcoin as Legal Tender." Harvard Business School Teaching Note 325-005, October 2024.