“In the past, El Salvador struggled with confidence in its monetary policy, so in 2001, it ‘dollarized’ its economy and effectively handed over control of its monetary system to the United States Federal Reserve. He viewed the US dollar as a more stable and reliable currency than his.
Since the 2008 global financial crisis, the US has been pursuing a very experimental form of monetary policy that includes tools such as quantitative easing and a central bank that now directly monetizes, or buys, government-issued debt to keep debt down. interest rates. This is a playbook that is dictated by short-term needs and is driving down the value of the dollar. For a country like El Salvador, adoption as legal tender is a hedge that Bitcoin will maintain its long-term value against the dollar that has experienced unprecedented levels of loss of purchasing power.
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