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El Salvador Becomes First Country To Adopt Bitcoin as Official Legal Tender

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President Nayib Bukele believes the moves will help increase the number of Salvadorans engaging with financial institutions and help increase the amount of money that ends up in family’s pockets from remittances.


First in the World

In a 62-84 vote early Wednesday morning, the Congress of El Salvador voted to recognize Bitcoin as legal tender, making it the first country in the world to do so.

According to the bill, “The purpose of this law is to regulate bitcoin as unrestricted legal tender with liberating power, unlimited in any transaction, and to any title that public or private natural or legal persons require carrying out.”

This means that prices can now be shown in Bitcoin and taxes can be paid with the cryptocurrency. Additionally, exchanges in bitcoin will not be subject to capital gains tax. The country isn’t attempting any price controls with the currency, with the law stating that the exchange rate with the U.S. dollar — El Salvador’s other official currency — “will be freely established by the market.” 

However, there are concerns around Bitcoin’s accessibility. While using digital wallets and currency exchanges aren’t considered complicated once one understands how they work, many rural residents and older individuals don’t have the same level of experience with technology as younger and urban adults. To address this issue, the law also stipulates that the government will “promote the necessary training and mechanisms so that the population can access bitcoin transactions.”

Volatility Possible Liability

The country made the move to include Bitcoin as an official currency in hopes it will increase financial inclusion and banking penetration in the country. Currently, about 70% of the population doesn’t have access to traditional financial services. Beyond hoping citizens would use Bitcoin en-masse, President Nayib Bukele made a deal with the digital wallet company Strike to try and rebuild the country’s financial infrastructure using Bitcoin.

According to Bukele, it will also help with remittances. Salvadorans working abroad sent back nearly $7 billion last year, about 7% of which was lost to financial intermediaries. Bukele believes that sending Bitcoin back will result in lower fees, and therefore more money actually being put into the pockets of Salvadorans.

Still, there are other concerns, especially around Bitcoin’s volatility. In April, the currency reached an all-time high of $64,829, but it has since dropped by nearly half (although looking at a 12-month period, the crypto is still up 230%). In the short term, the crypto is known for jumping up and down over 10% regularly.

It’s unclear how much that volatility will affect the country’s economy, or just how effective the government’s plans to use Bitcoin to draw more citizens into the financial world will be. However, there are concerns about Bitcoin’s limitations. Its biggest liability is its relatively slow transaction rate by being limited to 4.6 transactions per second.

See what others are saying: (Bloomberg) (CNBC) (Reuters)

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China Cautiously Crawls Out of Zero COVID Policy

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Estimates put the number of people who will die if China fully reopens between 1.3 and 2 million, but higher vaccination rates could limit the death toll.


People Go Back to Bars

The Chinese government has begun to ease some of its notoriously strict pandemic lockdown measures, signaling that the end of the “zero-COVID” policy may be on the horizon.

On Monday, commuters in Beijing and at least 16 other cities were allowed to board buses and subways without a virus test in the previous 48 hours for the first time in months.

In Shanghai, visitors to most sites will require a negative test within the last week, rather than the last two days, though schools, hospitals, and bars will require one within the past 48 hours.

Dining in restaurants in some parts of Beijing is still prohibited, but bars and restaurants in many areas of the country are reopening.

In Urumqi, where anti-lockdown protests erupted late last month after an apartment fire killed 10 people, authorities said in a statement Monday that malls, markets, and other venues will reopen.

Zhengzhou, the central city home to the world’s largest iPhone plant which was last month rocked by violent unrest, will no longer require COVID test results for public transport, taxis, and visits to “public areas”, authorities said in a Sunday statement.

Beijing authorities had required registration to purchase fever, cough, and soar throat medicine, which they believed people were using to hide their coronavirus infections, but that mandate has been lifted. Certain districts in the capital also announced that some residents may self-isolate inside their homes rather than being forced to quarantine in a centralized facility.

Is China Ready to Reopen?

Vice Premier Sun Chunlan, who oversees COVID efforts, said last week that the country’s health system had withstood the test of the virus and that the omicron subvariant is less deadly than previous strains.

But there has not been a significant drop in cases recently to prompt the easing of restrictions. On Monday, the government reported 30,014 new cases, down from last week’s peak of over 40,000 but still near record highs for China.

Some observers speculate that the government’s move was related to the recent protests, in which thousands of people poured onto the streets of several major cities to demand freedom and an end to the zero-COVID policy. Authorities cracked down on demonstrators, and any mention of the protests was rigorously censored on Chinese social media.

There was no sign of any significant unrest this weekend.

Although many people are excited to enjoy less restricted lives and restart a shuddered economy, others are concerned about the public health consequences reopening society could incur. Estimates put the number of people who will die from the coronavirus if China fully reopens between 1.3 and 2 million, but higher vaccination rates could limit the death toll.

Last week, the government launched a campaign to vaccinate the elderly population.

Only about 40% of people over the age of 80 have gotten their booster shot, according to official statistics.

Health experts and economists say vaccination rates and ICU preparedness won’t be sufficient to fully end the zero-COVID policy until mid-2023 or 2024.

See what others are saying: (BBC) (Associated Press) (Reuters)

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India Pedestrian Bridge Collapsed 4 Days After Renovations, Killing Over 100 People

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The company responsible for the upkeep of the Morbi bridge did not obtain a safety certificate before re-opening.


Bridge Collapses

After seven months of renovations, the Morbi walking bridge in India opened to the public. Four days later, the bridge collapsed, killing more than 130 people. 

According to the local government, there were about 200 people on the bridge when it collapsed on Sunday, despite its capacity of 125. 

During a campaign event on Monday, India’s Prime Minister Narendra Modi said the state government had set up a committee to investigate the tragedy.

“I assure the people of the country that there will be nothing lacking in the relief and rescue efforts,” he stated.

Along with the investigation, the state has launched a criminal complaint against Oreva Group, the company responsible for maintaining the bridge. Oreva Group reopened the bridge after renovations without getting a safety certificate from the government. 

Shifting Blame

In response, Oreva Group spoke to a local news outlet and blamed those on the bridge for its collapse.

“While we are waiting for more information, prima facie, the bridge collapsed as too many people in the mid-section of the bridge were trying to sway it from one way to the other,” the group claimed.

The state government has offered compensation for the families of the deceased, but that is not enough for some. One father whose wife and two children died in the collapse told VICE he wants answers and accountability.

“Why were so many people given tickets? Who allowed them? Who is answerable?” he asked.

Indian police have arrested nine people including ticketing clerks and security guards for failing to regulate the crowd, according to Reuters. 

See what others are saying: (Reuters) (VICE) (CNN)

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Xi Jinping Tightens Grip on China by Eliminating Rivals

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Despite the staggering power grab, Xi faces geopolitical competition from abroad as well as social and economic instability at home.


Xi Surrounds Himself With Allies

Chinese President Xi Jinping shook up politics over the weekend when he revealed the government’s new leadership, almost exclusively composed of his own hardline loyalists.

Six men — Li Qiang, Zhao Leji, Wang Huning, Cai Qi, Ding Xuexiang, and Li Xi — will form the Politburo Standing Committee, China’s top ruling body.

The four new members are all Xi loyalists, pushing out Premier Li Keqiang and the head of China’s top advisory body Wang Yang, two key party figures outside Xi’s inner circle who retired despite being eligible to serve another term.

For the first time in a quarter-century, China’s 24-member Politburo will be made up entirely of men, underlining the exclusion of women from Chinese politics.

An official account of the selection process said that a top criterion for leadership was loyalty to Xi, and rising officials must stay in lockstep with him “in thinking, politics and action.”

Topping off the developments, Xi officially secured an unprecedented third term as leader, something that was only made possible in 2018 when the government abolished term limits on the presidency. The weekend marked China’s greatest consolidation of political power in a single figure in decades.

As the 20th Communist Party Congress came to a close Saturday, China’s former leader Hu Jintao appeared reluctant as he was suddenly and inexplicably escorted from his seat next to Xi out of the Great Hall of the People.

Some commentators have argued that a tightly knit band of yes men may help Xi fend off internal party dissent, but it could ultimately result in poor governance as his subordinates fear giving him bad news.

The Arc of History Bends Toward China

Despite the extreme concentration of political power, China’s Communist Party stares down a gauntlet of challenges both foreign and domestic.

Beijing remains locked in a strategic competition with Washington, which has sought to contain the East Asian rival’s rise as a global superpower, but the past week’s congress may portend a stubbornly defiant China for years to come.

Xi is expected to use his firmly secure position within the party to pursue his agenda in full force — by strengthening Beijing’s claim over Taiwan, expanding China’s economic foothold in developing countries, and achieving self-sufficiency in strategic technologies such as semiconductors.

At home, China’s economy has faltered during the pandemic, with high unemployment, low consumption, and slow economic growth putting pressure on a government that stakes much of its legitimacy on promises to deliver prosperity to the population. Between July and September, the country’s GDP grew by 3.9%, according to official data released Monday, which is above many analysts’ expectations but still far below the state’s target of around 5.5%.

China’s National Bureau of Statistics postponed the data’s publication last week ahead of the 20th party congress, reinforcing concerns that Xi’s leadership will put politics before economics.

Monday’s announcement roiled stock markets, with Hong Kong’s Hang Seng Index plunging 6%, as well as the Shanghai Composite and the Shenzhen Composite Index both falling by about 2%.

Beijing has also seen increased political resistance from the population, from anti-lockdown protests in Shanghai to widespread mortgage boycotts over delays from real estate developers.

Last week, a man unfurled two large banners from an overpass in Beijing and called President Xi a “dictator” through a megaphone.

Such small-scale demonstrations are not new, but they took place in the capital just before the congress drew enough attention for photos of the stunt to go viral on social media, where an equally swift censorship campaign stamped out any mention of it.

See what others are saying: (The New York Times) (CNN) (The Washington Post)

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