From Dollarization to Bitcoinization: El Salvador's Monetary Experiment

ABSTRACT El Salvador has emerged as a Latin American trailblazer by implementing ambitious policies such as adopting the US dollar in 2001 and Bitcoin in 2021. This study analyzes the implications of these currency adoptions for El Salvador's economy. It delves into the underlying factors that prompted the implementation of both measures, explores their similarities and interconnections, and assesses their effects on the national economy. The article concludes that neither policy has proven sufficient to transform El Salvador's economy or foster sustainable growth and progress. Currency changes alone cannot adequately tackle the structural economic difficulties El Salvador faces. Thus, alternative strategies and comprehensive approaches must be considered to overcome these challenges and stimulate long‐term economic development in the country.