An historic change in global finance occurred when El Salvador became the first nation to adopt Bitcoin as legal tender in June 2021. The present case study investigates the economic change of this remarkable resolution and the possible impacts of incorporating Bitcoin on significant macroeconomic factors including GDP, employment, investments and inflation rates also remittance inflows and government bond interest rates. Aiming to increase financial inclusion lower remittance costs draw in foreign investment and establish El Salvador as a leader in the use of cryptocurrencies nationally the adoption of Bitcoin was made possible by the Chivo Wallet and supported by government initiatives. Using a control group of nearby nations that have not enacted similar laws this study compares El Salvador economic performance before and after Bitcoin integration using a Difference-in-Difference (DiD) regression model to determine the causal effects of Bitcoin adoption. To assess the effects of this policy, several important variables are examined such as GDP growth employment rate investment rate inflation remittance inflows and interest rates. By using this method, the research seeks to offer a comprehensive understanding of how the adoption as Bitcoin can alter macroeconomic dynamics in a developing nation. In addition to adding to the current global discussion on cryptocurrency integration this analysis clarifies the wider economic ramifications for nations considering comparable monetary experiments.
Date of Award | 15 Oct 2024 |
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Original language | English |
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Awarding Institution | - Universidade Católica Portuguesa
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Supervisor | Ricardo Reis (Supervisor) |
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- Bitcoin
- Financial inclusion
- Digital currency adoption
- Financial regulation
- Legal tender
- Economic policy
- Financial innovation
Evaluating the macroeconomic effects of bitcoin integration in El Salvador: a financial case study
Charfi, A. (Student). 15 Oct 2024
Student thesis: Master's Thesis