Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/302552 
Year of Publication: 
2024
Series/Report no.: 
Darmstadt Discussion Papers in Economics No. 247
Publisher: 
Technische Universität Darmstadt, Department of Law and Economics, Darmstadt
Abstract: 
This paper explores a monetary experiment, the adoption of Bitcoin as legal tender in El Salvador in 2021, to analyze the impact of digital currencies on international capital flows. Using a difference-in-differences approach, we find that, instead of making transfers easier, El Salvador's official cross-border financial activity has decreased after the monetary change. This finding may reflect an increase in uncertainty. However, it is also in line with findings that link digital assets to illegal activity as previously officially recorded financial transfers may have been replaced by unrecorded activities.
Subjects: 
crypto-assets
digital currency
legal tender
bitcoin
JEL: 
E42
E58
F21
F32
F38
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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