El Salvador had already planned to launch Volcano Bonds in March, but had to postpone it.
Myth meets reality, El Salvador is getting closer to Volcano Bonds
No, we have not gone crazy, we are always on top of the story, but it is natural to mythologize El Salvador, which in the eyes of pro-crypto people must really be a mythical city, an Atlantis of the crypto world, partly because of its history, partly because of its binding “hands and feet” to Bitcoin and the fantastic world of Tokens.
A brief review is necessary to understand that the El Salvador project started from a far-off point, and not without difficulty.
The Central American country known for its surf beaches, Volcanoes and now Bitcoin, made BTC legal tender on 7 September 2021. Since this historic date, tourism in San Salvador (the capital), but also in the country in general, has increased by 30% and is still on the rise, although there is still a fair amount of crime.
The country has officially launched its own wallet (Chivo) with which citizens and tourists can carry out Bitcoin transactions quickly and efficiently, a revolution that is leading the way for other countries.
To cite just one example, it is recent news that Turkey is interested in this system of transactions, an alternative system perhaps to be used alongside the local Fiat currency.
El Salvador’s latest step will be the Volcano Bonds, thus named because of the dense presence of volcanoes on the state’s territory and also because of their function in the Bitcoin system. Thanks to them, the state is able to use green energy to mine BTC for its own interest.
Operation Volcano Bond
In this framework of an almost perfect city, very much on the ball, something is creaking. Volcano Bonds or Bitcoin Bonds, as they are called.
The desire to use and create this tool stems from the very real need of the small state (about 6 million inhabitants) to repay its public debt and finance itself.
The transformation of El Salvador into a “city-state” in which Bitcoin is the master has been very successful but has soured its relationship with the International Monetary Fund (IMF).
The endorsement of this supranational body is necessary to carry out the bond transaction, but the IMF is stalling because it views the example of the Central American state as a dangerous precedent that could undermine its authority.
The country’s finance minister, Alejandro Zelaya, has postponed the operation that was initially scheduled for March to September this year.
State President Nayib Bukele recently tweeted about the delays on the Bitcoin Bond issue:
“I’m a fan of @BitcoinMagazine, please don’t spread @Reuters FUD.
The #Bitcoin Volcano Bonds 🌋 will be issued with @bitfinex.
The short delay in the issuance is only because we are prioritizing internal pension reform and we have to send that to congress before”.
The comment suggests that the IMF is not scheming against this operation but that it was a conscientious choice by the government to put pension reform before the Bonds.
But not everyone believed this version.
According to what Carlos Acevedo told ElSalvador.com:
“The negotiation with the fund is practically dead. It should be revived, the issuance of volcano bonds is another issue that is getting complicated for the president”.
Avacedo then went on to reiterate:
“First they said in January, then in March, then they said that the digital goods law was not ready, then that pensions were a priority, now the issue of security. I think the government has realized that there is no. there is enough interest in the markets to capture this problem”.
Lies have short legs and whether he is right we will soon see.
The billion bonds planned by Bukele with a yield of 6.5% would be good for El Salvador, the Salvadorans, the crypto world and the pockets of investors, but they collide with the thinking of the International Monetary Fund.
At this point all we can do is wait, September will come soon.