2021-06-09 19:49:54
Several countries in the LATAM area do rely on a foreign currency, mainly the USD. The issue is that native currencies are inflated and therefore a less able to fulfill basic features of a currency e.g. store of value. However, there is very limited access to foreign currencies and citizens mainly rely on a non-government black market foreign exchange rate. The lack of an accessible stable currency stagnates the economy and decreases purchasing power.
The issue of relying on a foreign currency is the transaction costs. In Venezuela, there is up to a 30% premium to acquire small USD notes.
The transaction costs are relatively high considering there are quite a few countries in the LATAM area that do rely on US dollars and their native currency is highly inflated.
Bitcoin as a reserve currency?
Bitcoin could potentially be used as a reserve currency, similar to gold and USD. This would imply that Bitcoin would be seen as a currency and therefore gets the recognition it should get. However, the biggest take is here that if that would happen it would force the Western world and especially the US to accelerate their cryptocurrency frameworks. In general, it could mean that the US has to buy Bitcoin to make sure that its current position as a superpower stays untouched. Another thing that could happen is that the US is forcing countries with trading embargo’s to use the USD once again, to ensure that their position remains strong.
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