Here's why central bankers are talking about bitcoin in El Salvador this week

Quick Take

  • El Salvador’s president Nayib Bukele tweeted on Sunday that El Salvador will be hosting more than 40 countries this week to discuss topics including bitcoin in the Central American country. 

  • Despite headlines playing up bitcoin’s focus, the event is not primarily about cryptocurrency.

On Sunday evening, El Salvador's President Nayib Bukele tweeted that the nation will be hosting more than 40 countries this week to discuss topics including the Central American country's bitcoin rollout. 

“Tomorrow, 32 central banks and 12 financial authorities (44 countries) will meet in El Salvador to discuss financial inclusion, digital economy, banking the unbanked, the Bitcoin rollout and its benefits in our country,” the tweet said. 

Many interpreted this to mean that El Salvador, which last year made bitcoin legal tender and passed a law requiring that most merchants accept it, is holding a bitcoin-focused conference for central bankers. That's not quite the case, however.

While Bukele listed all of the central banks that would be participating in the talks, he did not tweet the name of the event. As it turns out, two financial meetings are happening in San Salvador between May 16 and May 19: The 25th Digital Financial Services Working Group (DFSWG) and 18th SME Finance Working Group (SMEFWG). 

These working groups are both part of the Alliance For Financial Inclusion (AFI), a Malaysia-based organization that describes itself as “a policy leadership alliance owned and led by member central banks and financial regulatory institutions with the common objective of advancing financial inclusion at the country, regional and international levels.” El Salvador's Central Reserve Bank is jointly hosting these two working group meetings with AFI. 

But the idea that these meetings would focus mainly on bitcoin seems overplayed, especially considering that the AFI event page does not even mention crypto or bitcoin by name when describing the content the working groups will cover.

This confusion has compelled at least one country to set the record straight. Paraguay’s central bank (BCP) issued a May 16 statement saying that while it is participating in the SME Finance Working Group meeting, that event is not primarily focused on crypto. “The focus of the meeting is not related to cryptocurrencies or the like,” a translation of the Spanish-language BCP statement reads. The bank explained that it was releasing the clarification following publications stating it would participate in an "international event about cryptocurrencies." 

The BCP then reiterated that cryptocurrency is not legal tender in Paraguay by linking back to its 2019 remarks on the topic. "Likewise, the BCP does not plan to discuss cryptocurrencies in the said environment or meeting, a matter on which an institutional position has been established at the time," it added.

The Block asked AFI for an agenda but did not receive one by press time.

Cryptocurrency has come up during the working group meetings as central bank heads discuss financial inclusion. After all, financial leaders sitting in El Salvador are probably curious to know how the country's bitcoin implementation is playing out there. But it's a stretch to say this is “a conference that may best be described as the Davos for Bitcoin,” as one media outlet wrote. It is primarily focused on financial inclusion, and one of several meetings that AFI holds each year.

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