Cuba, Paraguay, Brazil and Costa Rica would be among the nations with the highest benefits.
The Cuban population has the highest average in the region for sending money home.
The American economist Steve Hanke, one of the most fervent critics of El Salvador’s Bitcoin Law, believes that there is every reason to distrust President Nayib Bukele’s plan to adopt the cryptoasset as a legal currency.
The economics professor at John Hopkins University in the United States pointed out that, the high transaction costs of remittances are not a problem for Salvadorans. Well, according to World Bank data, the Central American nation “has the lowest remittance costs among the countries of Latin America and the Caribbean,” as posted on Twitter.
Hanke accompanied his comment with a graph in which it is observed that in effect the average cost of sending remittances to El Salvador is comparatively lower with respect to 18 countries in Latin America and the Caribbean. “This is contrary to what Nayib Bukele wants to be believed,” added the economist in his publication.
The ease and low cost that bitcoin offers for sending remittances was one of the central points on which it was based the president of El Salvador to promote the use of bitcoin in the country. In fact, he estimates that Salvadorans would save USD 400 million annually by sending remittances with the cryptocurrency instead of the dollar, as CriptoNoticias has reported.
Rather, Hanke believes that El Salvador’s Bitcoin Law will provide a never-ending stream of financing for the plans of Bukele’s “totalitarian” government. Furthermore, he classifies the regulation as “unnecessary, fanciful and very unpopular,” as he pointed out in an article recently published in the National Review.
Sending remittances with bitcoin would benefit Cuba, Paraguay and other countries
While it is true that the graph shared by Hanke shows that the average cost of sending remittances to El Salvador is lower than that of 18 other countries in Latin America and the Caribbean, it also reveals these nations can get more out of bitcoin than the Salvadoran territory.
Last year, people from Cuba, Paraguay, Brazil and Costa Rica spent between 6.60% and 10.53% on commissions, that is, the highest averages in the region for sending money to their countries, according to the economist’s calculations.
Others such as Peru, Bolivia, the Dominican Republic and Colombia are in the group of 16 nations with an average commission expense above 4%. Only El Salvador, Guatemala and Panama have the lowest remittance commission costs on the list shared by Hanke. This is based on the percentages charged for remittance services for each standard transfer of USD 200.
In Cuba, as in El Salvador, remittances are the main source of income for the population. They are the result of the efforts of tens of thousands of exiles who send money to their relatives on the island to help them meet basic needs.
Bitcoin offers a fast and inexpensive way to send cross-border transfers without having to resort to high-cost traditional services. However, technological barriers can get in the way of the widespread use and adoption of bitcoin in these countries.
With respect to El Salvador, contrary to what Hanke pointed out, the Bank of America considers that the adoption of bitcoin will bring benefits to the Central American nation in four aspects. These are remittances, financial digitization, greater options for consumers and the possibility of opening business channels with foreign companies.
All these benefits indicated by Bank of America can also have a positive impact on other Latin American and Caribbean countries. In this part of the world Jamaica, Haiti and Suriname, they are also among those who suffer the most with high commission costs for sending remittances through traditional services.