Bitcoin Law in El Salvador Denies Its People a Choice

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Avik Roy’s June 30 letter, written in response to our comment “El Salvador’s Big Bitcoin Mistake” (June 23), argues that El Salvador’s Bitcoin law will improve the freedom of currency choice for Salvadorans . His conclusion is unfounded and wrong.

To draw a conclusion, Mr. Roy needs to know the details of the legal modalities of currency choice in El Salvador, namely the Currency Integration Act (2000). This law, which we helped draft, has effectively converted El Salvador into dollars. Articles 2 and 6 state that currency competition takes precedence. Any currency that is mutually agreed upon by buyers and sellers is legal for all trade and contractual obligations.

Enter the Bitcoin Law of June 8th. Article 7 states that Salvadorans must accept Bitcoin when offered. This is a standard feature of foreclosure laws. It will take away the choice of those offered Bitcoin and limit the freedoms enshrined in El Salvador’s competitive currency regime.

Prof Steve H. Hanke

Johns Hopkins University