Welcome to Latam Insights, a compendium of the most relevant crypto and economic development news from Latin America during the last week. In this issue, Bolivia passes a law to sell gold for dollars, the Central Bank of Argentina bans fintech companies from using crypto, and Fitch improves El Salvador’s credit rating.
Bolivia Passes Law to Sell Gold for Dollars
Bolivia recently passed a law that will allow the government to sell up to 50% of its gold reserves in dollars, easing the internal scarcity of dollars. The law gives faculties to the government to negotiate the sale of 22 tons of gold out of the almost 44 available in the local reserves.
The initiative had been presented back in 2021, but it was only recently rescued and passed by the Congress, which is dominated by the party of Bolivian president Luis Arce. Jorge Richter, a presidential spokesperson, explained the objective of the swift approval of the law. He stated :
The country has a tool so that these events and situations of the past days that we have known are not repeated, difficulties in the production of North American currency.
Almost all Bolivian banks had previously established a $300 daily withdrawal limit for their users, and the Central Bank of Bolivia had to organize direct sales to satisfy the local demand for foreign currency.
Central Bank of Argentina Bans Fintech Companies From Using Crypto
On May 4, the Central Bank of Argentina issued a communication banning certain fintech providers from using cryptocurrency assets or offering services linked to digital assets or other assets “not regulated by the competent national authority and authorized by the Central Bank of the Argentine Republic.” to their customers.
The measure would only affect fintech companies that provide direct payments accounts, including Ualá, MercadoPago, Personal Pay, DolarApp, Nubi, and MODO, among others . Bitcoin Argentina, a national NGO, rejected this measure, stating that it “is surprising and unconsulted. It is not understood what objective the central bank is seeking by prohibiting an activity that today is entirely satisfactory and useful for the clients of the local exchanges.”
Fitch Ratings Improves El Salvador’s Credit Rating
Fitch Ratings, one of the big three credit rating agencies, upgraded the credit rating of El Salvador, even with the adoption of bitcoin as a legal tender. Fitch upgraded El Salvador’s rating from CC to CCC+, stating that this was the consequence of “successful completion of the exchange and payment of significant global bond write-downs early in the year, and reflects Fitch’s view that another event of default no longer appears likely.”
Salvadoran president Nayib Bukele celebrated the change, explaining he could not wait for Fitch wait to “upgrade it even more, once we announce our budget surplus for 2024.”
What do you think about the developments in Latin America this week? Tell us in the comment section below.