President El Salvador leads Bitcoin adoption in second term

El Salvador’s President Nayib Bukele will begin his second term in office on Saturday at the age of 42 with unprecedented support from the electorate. Re-elected in February with an overwhelming 85% of the vote, Bukele now enjoys almost complete control over parliament and other state institutions. His aggressive approach to criminal gangs has brought back a sense of normalcy in a society long plagued by violence, boosting his popularity.

Despite criticism from human rights groups, Bukele, who unapologetically describes himself as a “cool dictator,” is known as the most popular leader in Latin America according to regional polls. This widespread support has resulted in a dominant legislative presence, with his New Ideas party winning 54 out of 60 seats in the legislative elections, giving him significant power to implement his policies.

Bukele’s Bitcoin Adoption and Economic Strategy

One of the most ambitious and controversial aspects of Bukele’s government is the adoption of Bitcoin (BTC) as legal tender. In 2021, El Salvador became the first country in the world to embrace Bitcoin in this way, a move intended to revolutionize its economy. Bukele’s strategy is multi-faceted: he aims to attract foreign investment, increase financial inclusion among unbanked citizens and reduce dependence on the US dollar.

This bold initiative involved investing an undisclosed amount of taxpayer money in Bitcoin, despite stern warnings from international financial institutions about the cryptocurrency’s notorious volatility. Bitcoin’s price swings have been dramatic, with lows of $16,000 and highs of $73,797. However, Bukele remains steadfast in his belief that Bitcoin’s potential benefits, such as lower costs for money transfers and greater economic autonomy, outweigh the risks associated with its instability.

Bukele’s gamble with Bitcoin comes at a time when El Salvador faces significant economic challenges. The country’s public debt has risen to more than $30 billion, or 84% of its GDP, and economic growth is expected to slow to 3% this year from 3.5% in 2023. Critics argue that Bitcoin’s volatility is could further destabilize the economy and increase financial uncertainty. Despite these concerns, Bukele argues that his efforts to reduce violent crime will support economic stability and growth.

His promise of a “period of prosperity” hinges on the successful integration of Bitcoin into the economy and the cryptocurrency’s wider adoption by the global financial community. As Bukele continues to pursue his vision, the outcome of this financial experiment will be crucial in shaping El Salvador’s economic future and could set a precedent for other countries considering similar steps.

Inauguration and international relations

Bukele’s inauguration ceremony, held at the National Palace in San Salvador, was a large-scale event attended by dignitaries from around the world. Notable attendees included Spanish King Felipe VI and Argentine President Javier Milei, both of whom underlined Bukele’s influence and the international interest in his government.

In addition, Donald Trump Jr. present, highlighting Bukele’s connections and admiration for former US President Donald Trump. This gathering of prominent figures not only highlights Bukele’s growing stature on the international stage, but also reflects the broad spectrum of support and curiosity regarding his unconventional policies, especially the adoption of Bitcoin.