Is El Salvador Planning To Release A CBDC As This Local Newspaper Suggests?

Is El Salvador Planning To Release A CBDC As This Local Newspaper Suggests?

Is El Salvador about to break every Bitcoiner’s heart? Or is this fake news? The government is ready to unleash its own CBDC, according to Salvadoran digital newspaper El Faro. The Colon-Dollar is the tentative name. They based their report on leaked Google Meet videos between the brothers of President Bukele and high-ranked representatives from several blockchain-companies. It’s not clear if the CBDC or any plans they crafted in those meetings are still on the cards.

An interesting caveat to the whole situation is that the decision-makers, “Are not public servants with official appointments, but Ibrajim and Yusef, two brothers of Nayib Bukele who characterize themselves as advisers to the Presidency.” It’s also worth noting that the digital publication claims the videos they got are from May 27th, and June 4th and 7th. Jack Mallers’ announcement at the Bitcoin 2021 conference was June 6th. The Salvadoran Congress approved the Bitcoin Law on June 9th.

What Does The Government Say About The Videos?

The videos are real. However, they’re previous ideas that were being discussed but ended up discarded. Ernesto Sanabria, Press Secretary for the Presidency, told El Faro:

“At that time, we were studying different proposals. In the end, the proposal that made the most sense was to adopt Bitcoin together with the dollar, and have the dollar continue to be the reference currency.”

That clears everything up if we can believe it. However, El Faro says:

A source for this newspaper who knows about the negotiation process assured this medium that even after the approval of the Bitcoin Law, the plan to end up issuing a Salvadoran digital currency was still on the table.

That doesn’t mean anything if the Salvadoran government doesn’t actually create the CBDC. Will they do it, though? The videos contain several ideas that could be considered problematic.

What Do President Bukele’s Brothers Actually Say?

The El Faro report comes off as agenda-driven, but the short videos they actually published speak for themselves. Reportedly, Ibrajim and Yusef Bukele are talking to representatives from Cyprus-based Whizgrid and USA-based Algorand. On June 4th, Ibrajim said to the former:

Yes, we can back this government wallet. I don’t know, it could be 500 million US dollars in the Central Bank to establish this stablecoin’s reserve. From there, we can grant subsidies and loans to these people. That would help us to get started.”

The “stablecoin” they’re planning here would technically also be a CBDC. And, on June 7th, in a meeting with Algorand, he expressed an idea that would singlehandedly cancel all the support the Bitcoin community has given El Salvador.

“In the future, we would like to be able to make all cryptocurrencies legal tender. For that, we would need a government infrastructure that can cope with everything that’s coming.”

All cryptocurrencies? That’s a disaster waiting to happen.

What Do Jack Mallers And Strike Have To Do With The CBDC?

Are the CBDC and all those plans still on the cards? Or did Jack Mallers successfully convince the government advisors that a Bitcoin-only strategy was the way to go? The digital publication quotes a dialogue between the two parts that the published video doesn’t show. Mallers starts:

“The big obstacle we found is the acceptance of the merchants. They get a little nervous when we mention Bitcoin because they don’t know exactly how it’s regulated or if they’re going to do something a little bit wrong. ” Ibrajim responds that he plans to give incentives: “Yes, the rapid adoption plan is to give 50 dollars to all who register. That way, everyone will be automatically registered in the payment application. “

That did happen, even though the bonus was $30. In the published video, the smoking gun for the paper is that the President’s brother refers to everything as a done deal. Considering the recording is from few days before the Miami announcement, it’s not surprising.

Is The Digitalization Of Everything Coming With The CBDC?

According to El Faro, President Bukele is planning to digitalize, “the financial system, state registries and private contracts.” Besides the CBDC, they discussed with Whizgrid the digitalization of, “a digital tax and social security identification number. Then, the DUI, property deeds, birth certificates, vaccination record, subsidy cards, professional and academic certificates, even police and criminal records.

Another stake to the heart of the Bitcoin community, WhizGrid’s Ramy Copty made the following promise:

“We don’t have a regional office for Central or South America,” Copty said. “If we do a project of this scale, why isn’t El Salvador the main Cardano center for the entire region? Makes perfect sense “

Where did Cardano come from? We have no idea.

So, Are These Plans Still In The Cards, Or Are They Discarded?

It depends on who you want to believe. The videos are real, but, are the dates precise? And even if they are, could the Bukele brothers have just decided to go Bitcoin-only and scrap every other plan? That would be consistent with the President’s attitude so far, but, who knows?

On the other hand, could the Bukele brothers be about to pull an Elon Musk and betray the Bitcoin community after all the support they got from them? Will the simple Bitcoin Law get extremely complicated and full of smart contracts?

The evidence is inconclusive. However, we’ll know soon enough.