The Central Bank of Bolivia (BCB) published on March 13th, 2014, its annual inflation report, in which it excluded virtual currencies such as Bitcoin from the monetary policy of the country. This means that while they cannot be used to settle payments in national currency, Bolivian citizens and residents may use them to pay for goods and services.
In the “Informe de Política Monetaria” [Annual Monetary Policy Report] of March 2013, BCB highlighted a problem in Bolivia with small denomination banknotes, so it was decided to remove the 50-cent coins from circulation and increase the lowest note of currency slightly.
However, it seems complicated to believe that the denomination of banknotes in Bolivia is an issue since currently, they have notes of 2, 5, 10, 20, and 50 Bolivianos. Therefore, it is more likely just a way to ban Bitcoin from being used as money or currency in the country.
Also interesting is that “the BCB will exempt the acquisition of banknotes and coins by businesses related to the virtual currency of foreign exchange transactions.” One interpretation is that they are afraid of Bitcoin’s possibilities of being used for money laundering or not complying with tax payments.
But why would they accept banknotes but not Bitcoin?
It is more likely that they don’t want to promote Bitcoin since some people see it as a way to avoid taxes, and the Bolivian government is nearly bankrupt and needs all of its citizens and residents working and paying taxes on their income.
For those who don’t know, Bitcoin is a virtual currency that combines some characteristics of electronic money with those of cash or bearer instruments. The only important thing is that you own a device (e.g., computer or mobile phone) to use it. Transactions are made peer-to-peer without central authorities, like banks, and can be carried out more rapidly than with traditional currencies for lower costs. To know more you can visit https://bitqt-app.com/
As in many other countries globally, there is no specific regulation on virtual currencies, and it is not considered legal tender. However, the BCB has announced that it will create a working group to study and propose regulations that would give more security to those who use virtual currencies and those related to their purchase or sale.
In short, Bolivia’s Central Bank decided further to exclude virtual currencies from its monetary policy, which means that its use by residents and citizens is done at their own risk. The only concession made was acquiring banknotes and coins for businesses engaged in foreign currency exchange transactions.
What is the impact of Bitcoin on Bolivia’s business activities?
The main impact of Bitcoin on Bolivia’s business activities is that the country will receive more investments, and this should be good news. Since it has furthermore announced that there are no legal problems with its use, it is expected to see an increase in companies accepting bitcoins as a form of payment. This would have a similar impact to what happened in the USA when the US government decided to legalize Bitcoin.
What is the impact of Bitcoin on Bolivia’s international relations?
To clarify, Bitcoin is not a currency, and it can’t be used to settle payments in national currency. So the BCB’s decision only affects its citizens and residents. However, it can be seen as an opportunity for other countries in Latin America, such as Brazil or Mexico, to promote bitcoins to remain at the forefront of financial technologies and attract investments.
What is the impact of Bitcoin on Bolivia’s economy? Would it be beneficial for its population?
The only potential benefit shortly would be attracting international tourists who want to use bitcoins to pay for their accommodation and transportation since some companies already accept virtual currencies as a form of payment.
What is the impact of Bitcoin on Bolivia’s business environment?
It can be said that this will create a more dynamic business environment where there are fewer restrictions to use new technologies. However, it should be remembered that operating in international markets requires having some knowledge about applicable regulations.
What changes would have to happen in Bolivia for its citizens and residents to use Bitcoin?
The main change that would have to happen is legislative, given that there are no legal problems. If someone wants to carry out transactions using bitcoins, the only restriction will be that this person has a device (computer or mobile phone) compatible with virtual currencies.
The rest of the process, like buying and selling bitcoins, can be done through local providers who will probably offer their service through the Internet. Also, this means that Bolivian residents and citizens can exchange bitcoins for US dollars or bolivars without asking permission from the BCB (since virtual currencies are not considered legal tender).