As a researcher with experience in financial markets and economic development, I find El Salvadoran President Nayib Bukele’s proposal for “Banks for Private Investment” (BPIs) to be an intriguing step towards financial innovation and inclusion. Given his previous advocacy for Bitcoin adoption in the country, it is not surprising that he aims to create a more conducive environment for investors using alternative assets like cryptocurrencies.
Nayib Bukele, president of El Salvador, is putting forth a plan to establish “Investment Banks for the Private Sector” (BPI), which would expand financial services and impose fewer regulations for investors in Bitcoin and US Dollars. Bukele is an advocate for Bitcoin usage in the country and made it legal tender there in 2021, making El Salvador the first nation to do so.
As a crypto investor, I’m excited about the possibility of President Biden advocating for the establishment of Better Payment Institutions (BPIs) during his second term in office. These BPIs would operate distinctly from our conventional banking system. If this proposal is approved, BPIs will emerge as innovative financial intermediaries that cater to a wider range of financial needs for their clients.
Milena Maryoga, the Salvadoran ambassador to the US, shared on platform X that as part of El Salvador’s economic strategy, we intend to establish a new investment bank named BPI, or Bank for Private Investment. This financial institution will provide investors with more diverse financing alternatives in both US Dollars and Bitcoin.
“BPIs (Banking Institutions and Financier Companies) will encounter less rigor during their establishment and management compared to conventional banks. Their boards of directors, which must consist of a minimum of two members, can be of Salvadoran or foreign nationality.”
In addition, BPIs are exempt from dealing with other financial institutions related to their shareholders when extending credits or taking on significant risks. As reported by El Mundo, a Salvadoran newspaper, these institutions hold unique privileges allowing them to grant credit or assume risks for over a quarter of their Asset Fund towards the same individual – an advantage not typically found among conventional banks.
Banks have the option to serve as virtual asset providers, such as exchanges and custodians, once they obtain approval from the relevant authorities. They are not confined to handling only US Dollars or bitcoins; instead, they can process any international currencies during their operations.
The proposal for this project has not been officially accepted yet, but it could become a reality once approved by the Technology, Tourism, and Investment Commission. Awaiting confirmation from the agency regarding their decision.
Image by jorono from Pixabay
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2024-06-15 22:53