The legal currencies of El Salvador are the United States dollar, the Bitcoin cryptocurrency, and the Salvadoran Peso or Colon. The U.S. dollar is El Salvador’s legal currency used regularly; this is the legal tender used for most local and international transactions; Bitcoin is second.
Since September 2021, El Salvador has had three legal currencies (Colon, US Dollar, and Bitcoin). But in reality, only two work. The Salvadoran colon is still a legal tender in the country; however, it is no longer in circulation.
Although Bitcoin is a Salvadoran legal tender, the Salvadoran government informed the population that all salaries would continue to be paid in dollars. In 2022, areas visited by foreign tourists, such as the Surf City El Salvador beaches, are where most Bitcoin transactions take place.
Bitcoin, the New Legal Currency of El Salvador
On Tuesday, September 7th, 2021, by the initiative of President Nayib Bukele, El Salvador became the first country in the world to
accept bitcoin as a legal tender. Bitcoin became a legal currency in El Salvador, despite widespread skepticism domestically and internationally,
President Nayib Bukele’s government claimed that Bitcoin would give more Salvadorans access to bank services for the first time; additionally, it would save them
millions in fees on remittances sent home from abroad.
The U.S. Dollar. Principal Legal Currency of El Salvador
The United States dollar is the currency used daily by Salvadorans and businesses to do their transactions. It has been the de facto legal currency of El Salvador since 2001.
In 2001, the
Law of Monetary Integration allowed the circulation of the U.S. dollar in El Salvador alongside the Salvadoran Peso.
However, a law article was approved by the legislative assembly that required the Salvadoran Central Bank to exchange all Salvadoran notes in circulation for U.S. dollars.
As of the effective date of this law, the Central Reserve Bank of El Salvador, to the requirement of the banks of the system will exchange colones in circulation for dollars.” Article 4 of the Law of Monetary Integration.
Although the Peso was still legal tender, the banks exchanged them for dollars. Eventually, the U.S. dollar became the only currency in circulation.
The Salvadoran Colon. El Salvador’s Original Bank Notes
The Salvadoran Colon or Peso is the original Salvadoran currency. It is still legal tender; however, it is no longer in circulation.
The Salvadoran Peso history dates back to 1883. Under President Dr. Rafael Zaldívar, El Salvador’s first monetary law was created. El Salvador’s Mint issued coins in the denominations of one cent in copper. Also, five, ten, twenty, fifty cents, and one Peso in silver. Additionally, two and a half, five, ten, and twenty pesos in Gold.
The Salvadoran Peso has encountered many changes and looks since its original inception back in 1883. Salvadoran Pesos circulated until 2001.
El Salvador Legal Currency
As of 2021, El Salvador has three legal currencies; however, only two of them can be used, the U.S. dollar and Bitcoin.
Even with the approval of Bitcoin as a legal tender, “The U.S. dollar will continue to be the currency of El Salvador, and no one will be obliged to pay in Bitcoin,” expressed Nayib Bukele.