Bloomberg Línea — El Salvador’s experience with bitcoin (XBT) renews doubts about the true potential of the cryptocurrency to achieve real-world use as a means of payment, according to U.S. economist Paul Krugman. Krugman cited a report by the U.S. National Bureau of Economic Research (NBER), in association with CID Gallup, which states that only 20% of citizens continue to use Bitcoin after having their first contact with the cryptocurrency.
Krugman posited that, in its attempt to be a “Crypto Republic,” El Salvador has pushed for “optimal conditions to make it a functional form of money”, having declared Bitcoin legal tender and provided subsidies to promote it. But, he says, “despite Bitcoin’s legal tender status and the large incentives implemented by the government, the cryptocurrency is not a widely accepted medium of exchange in El Salvador”.
“Most businesses don’t accept it; few people use it,” Krugman wrote in a series of tweets on his personal account.
On the region’s stock markets, Chile’s IPSA index (IPSA) led the gains across the region, boosted by the performance of the communication services, materials and energy sectors. Shares of Entel (ENTEL), SQM/B (SQM/B), and SMU (SMU) were among the best performers of the day.
The Mexican index (MEXBOL) and Brazil’s Ibovespa (IBOV) also closed with gains.
Following is a roundup of Wednesday’s news from Bloomberg Línea and Bloomberg reporters across Latin America.
Argentina:
- After carrying out a nationwide strike last week due to lack of salary agreements, the Argentine Banking Association closed a 60% increase in four installments on Wednesday, one of the highest adjustments so far this year. In addition, the union and the employers agreed on two revisions to be made in October and December.
- Latin American e-commerce giant MercadoLibre will increase its labor force from 32,000 to 46,000 people by the end of 2022.
Brazil
- Despite the negative impact of the devaluation of the real and most Latin American and Caribbean currencies against the U.S. dollar on the value of their assets over the last year, Brazilian banks continued to dominate the list of the 50 largest Latin American banks in 2022, according to a survey by S&P Global Market Intelligence.
Chile:
- Chilean President Gabriel Boric’s popularity continues to fall precipitously. Eight weeks after taking office, the disapproval level of the Frente Amplio leader is 50%, according to a recent poll by pollster Tú Influyes.
Colombia:
- Colombian coffee continues to decline in both production and exports, with a double-digit slump in foreign sales, as harvests have been stymied by heavy rains.
Costa Rica:
- The University of Costa Rica’s ‘Hélice’ (propeller) program has selected 19 projects being executed by entrepreneurs to provide them with non-refundable economic support so that they can develop and enjoy greater growth.
Ecuador:
- Between January and March, loans to the commercial sector totaled $2.21 billion, a 22% increase over the same period of 2021. In these first three months of the year, 80,576 credits were granted, 7.4% more than last year.
Dominican Republic:
- In the first quarter of 2022, the Dominican Republic’s economy put in a strong performance, especially in the month of March, when tourist arrivals and the economic activity of Easter Week in bars, hotels and restaurants boosted economic growth.
El Salvador:
- El Salvador’s experience with bitcoin (XBT) renews doubts about the true potential of the cryptocurrency to achieve real-world use as a means of payment, according to U.S. economist Paul Krugman. Krugman cited a report by the U.S. National Bureau of Economic Research (NBER), in association with CID Gallup, which states that only 20% of citizens continue to use Bitcoin after having their first contact with the cryptocurrency. Krugman posited that, in its attempt to be a “Crypto Republic,” El Salvador has pushed for “optimal conditions to make it a functional form of money”, having declared Bitcoin legal tender and provided subsidies to promote it. But, he says, “despite Bitcoin’s legal tender status and the large incentives implemented by the government, the cryptocurrency is not a widely accepted medium of exchange in El Salvador”. “Most businesses don’t accept it; few people use it,” Krugman wrote in a series of tweets.
Mexico:
- The Mexican government presented a plan on Wednesday to stabilize prices during the next six months, and which seeks to contain the prices of 24 products of the basic food basket through a series of measures focused on grain production, energy, and agreements with the private sector.
Uruguay:
- Inflation inUruguay for April remained at the same monthly level of the previous year, and the Consumer Price Index stood at 9.37% in a year-on-year comparison. The CPI had reached 9.38% in March, up from 8.85% in February, far from the government’s target range of between 3% and 6%.
Venezuela:
- After having emerged from hyperinflation and returning to a single-digit monthly variation, inflation in Venezuela has accumulated 22% so far this year, according to the Venezuelan Financial Observatory, an institution created by the Venezuelan opposition.
