El Salvador: Currency & Financial System

El Salvador adopted the United States dollar as its official currency in January 2001, when the Legislative Assembly passed the Monetary Integration Act under President Francisco Flores. The law allowed the dollar to circulate alongside the existing currency, the colón, though the colón was effectively withdrawn from circulation within months, leaving the dollar as the dominant medium of exchange.

Two decades later, President Nayib Bukele's government made El Salvador the first country in the world to adopt Bitcoin as legal tender, under a law that took effect in September 2021. The measure required businesses to accept the cryptocurrency for payment and introduced a state-backed digital wallet, Chivo, to facilitate its use, alongside government purchases of Bitcoin for a national reserve.

As of 2026, Bitcoin's mandatory legal-tender status has been substantially rolled back. Lawmakers amended the Bitcoin Law in January 2025 as part of a $1.4 billion loan agreement with the International Monetary Fund, ending the requirement that merchants accept it and removing it as a means of paying taxes. The US dollar remains El Salvador's primary currency and the backbone of its financial system.