What Currency Does El Salvador Use?

What Currency Does El Salvador Use?

El Salvador uses the United States Dollar (USD) as its official currency. The U.S. dollar has been in use since 2001, replacing the Salvadoran colón. Bitcoin was briefly legal tender from 2021 to early 2025, but it is no longer officially recognized.

A Brief History: From Colón to Dollar

Before adopting the U.S. dollar, El Salvador used the Salvadoran Colón (SVC) from 1892 to 2001. Due to inflation and economic instability, the government passed the Monetary Integration Law, officially replacing the colón with the U.S. dollar on January 1, 2001.

• The exchange rate was fixed at 8.75 colones per USD.
• The colón is still technically legal tender but no longer circulates in the economy.

The main goal of dollarization was to reduce inflation, attract foreign investment, and provide economic stability, essentially anchoring the country’s economy to the strength of the U.S. financial system.

Does El Salvador Use the US Dollar?

Yes, El Salvador uses the US dollar as its only active and official currency.

• All salaries, taxes, goods, and services are priced in USD.
• Local banks, ATMs, and businesses operate entirely in U.S. dollars.
• The government no longer mints its own currency.

The use of the dollar gives El Salvador greater access to international trade and financial markets but also removes its ability to control monetary policy through a central bank, making it dependent on decisions from the U.S. Federal Reserve.

Is El Salvador Using Bitcoin as a Currency?

No, El Salvador is no longer using Bitcoin as legal tender.

• In September 2021, El Salvador became the first country in the world to make Bitcoin legal tender alongside the U.S. dollar.
• By early 2025, under IMF pressure, the government officially revoked Bitcoin’s legal tender status.

Although Bitcoin can still be used voluntarily, businesses are no longer required by law to accept it. The government-backed Chivo Wallet and various incentives failed to spark widespread adoption, with the majority of Salvadorans preferring the stability of the U.S. dollar.

How Much Is El Salvador’s Bitcoin Worth?

Despite Bitcoin no longer being legal tender, El Salvador continues to hold approximately 6,000 BTC in its national reserves.

• As of 2025, this is worth over $600 million, depending on the market price.
• The country reported unrealized profits of over $300 million during Bitcoin’s bull run in early 2025.

However, reports suggest that many of these holdings are due to wallet reshuffling rather than new acquisitions. The IMF and financial watchdogs have questioned the transparency of these transactions.

Why Did El Salvador Adopt Bitcoin as Legal Tender?

The Bitcoin Law was introduced under President Nayib Bukele to address key economic challenges:

• Financial inclusion: Over 70% of Salvadorans lacked access to traditional banking services.
• Lower remittance costs: El Salvador heavily depends on remittances, which make up over 20% of GDP.
• Innovation and tourism: The government promoted projects like Bitcoin Beach and proposed a futuristic Bitcoin City powered by volcanic energy.

However, low adoption rates (only 7–15% used Bitcoin) and extreme volatility made it unsuitable for everyday use. Public pushback, international pressure, and limited merchant participation led to the rollback in 2025.

Trader’s Perspective: Currency Stability vs. Speculation

From a trading and macroeconomic standpoint:

• USD provides liquidity, stability, and global acceptance, making it ideal for trade and investment.
• Bitcoin, while offering upside potential, introduced volatility, fiscal uncertainty, and regulatory challenges.

The El Salvador Bitcoin experiment functioned more as a speculative asset strategy than a genuine currency alternative. With the revocation of its legal status, El Salvador has returned to a dollar-only economy, reinforcing investor confidence and re-aligning with traditional financial systems.

Conclusion

El Salvador’s experiment with Bitcoin may have attracted global attention, but in practice, the U.S. dollar remains the only widely accepted and stable currency in the country. After revoking Bitcoin’s legal tender status in early 2025, the government reaffirmed its commitment to monetary stability and investor confidence.

At Ultima Markets, we monitor these shifts closely to help traders navigate the macroeconomic impact of currency decisions. Whether you’re trading USD-based forex pairs or tracking crypto volatility, understanding how countries like El Salvador handle legal tender is critical to informed decision-making.

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