The report about a new stablecoin project by the El Salvadorian government is making headlines in the crypto community. This new stablecoin will act like a native token or CBDC that could be used to make payments for daily tasks and as an alternative for paperback. The news was first broken on San Salvador media outlet El Faro last Friday.
Two brothers of President Nayib Bukele, Ibrahim, and Yusef, hold a two hours video conference covering the subject in detail. The Bukele brothers claimed that they are representing the president and the government of Salvador. According to the video, the new stablecoin will be named Colon dollar, which is likely to release before 2021.
The Central Reserve Bank will Issue New Stablecoin
The Bukele brothers shared several research documents with the cryptocurrency investors. The negotiations reveal that the new stablecoin will be backed by a massive reserve of US Dollars and launched from the office of the Central Reserve Bank. Ibrahim Bukele claims that the government of El Salvador will be creating a huge dollar reserve to support the Colon Dollar.
The stablecoin will be connected with the government digital wallet called Chivo. El Salvador has unanimously passed the Bitcoin bill proposed by President Bukele only a few weeks ago. However, the government official commented that the proposal for stablecoin CBDC was rejected. Meanwhile, El Faro cited a unanimous source who claims that the preparations for the projects are still active.
El Salvador Bitcoin Adoption can End up Being a Huge Disaster for the Economy
Steve Hanke is a Professor of Economics at the John Hopkins University. He provided an academic perspective on the matter, claiming that the sudden Bitcoin adoption in El Salvador can bring massive ramifications. He further added that it is not a great idea to introduce Bitcoin payments in a country where most of the population does not have a bank account.
On the other hand, some analysts believe that holding a new native token could revive the value of the original national currency colon. Due to high inflation, the colon was replaced by the US dollar in 2001. The El Zonte beach is presented to the world as an experimental Bitcoin development zone present in the Central American country.