Dollarisation and the Central Reserve Bank (BCR) of El Salvador
What the Monetary Integration Law says
- Legal tender: the US dollar has unlimited legal tender for any payment, public or private.
- Fixed rate: the exchange rate between the colón and the dollar is fixed and unchangeable at 8.75 colones per dollar.
- Financial system in dollars: deposits, loans, pensions, securities and the accounting records of the financial system are expressed in US dollars (article 9).
- Other currencies: monetary obligations may be agreed in any other currency in legal circulation abroad, and must then be paid in that currency (article 2).
- The colón: colón notes and coins issued before the law remain legal tender permanently, but banks must exchange them for dollars free of charge when they are presented (article 5).
Source: Monetary Integration Law, Decree No. 201 of 2000 (SSF, PDF, in Spanish); World Trade Organization: Trade Policy Review of El Salvador, report by the Secretariat1,3
What the BCR does today
Without a currency of its own, the BCR lost its role in issuing money, in monetary policy and as lender of last resort to banks. The World Trade Organization noted this in its review of El Salvador's trade policy.3
- Financial regulation: its Standards Committee issues the technical rules (such as the NRP series) that the Superintendency of the Financial System (SSF) then enforces.
- Payment systems: it runs the interbank payment and settlement systems.
- Reserves: it manages the international reserves of the country.
- Statistics: it publishes national accounts, balance of payments, remittance and monetary data.
- Fiscal agent: it acts as financial agent of the State.
- Registers: it keeps the register of Bitcoin service providers.
Source: Central Reserve Bank of El Salvador: History; Central Reserve Bank: Register of Bitcoin service providers2,5
Why it matters for investors
- Pricing and profits in dollars: there is no currency to devalue against the dollar, and dividends can be sent abroad without conversion.
- Liquidity buffers instead of a lender of last resort: banks hold liquidity reserves, and the IMF programme of 2025 asks for continued reserve accumulation. The IMF projects gross reserves of USD 5,346 million at the end of 2026.
- Interest rates track the US: local rates move with US dollar rates plus a country risk premium.
- Reform of the central bank law: the IMF programme includes modernising the BCR organic law; check for changes before relying on the current text.
Source: IMF: Executive Board concludes the second and third reviews under the EFF for El Salvador (1 October 2026)4
Frequently Asked Questions
When did El Salvador adopt the US dollar?
The Monetary Integration Law made the US dollar legal tender in El Salvador from 1 January 2001, at a fixed rate of 8.75 colones per dollar.
What does the Central Reserve Bank do after dollarisation?
The BCR stopped issuing money and setting monetary policy, and now concentrates on financial regulation, payments and statistics.
Can contracts be agreed in other currencies?
Yes. Monetary obligations may be agreed in any other currency in legal circulation abroad, and must then be paid in that currency.
Sources
- Monetary Integration Law, Decree No. 201 of 2000 (SSF, PDF, in Spanish)
- Central Reserve Bank of El Salvador: History (in Spanish)
- World Trade Organization: Trade Policy Review of El Salvador, report by the Secretariat (in Spanish)
- IMF: Executive Board concludes the second and third reviews under the EFF for El Salvador (1 October 2026)
- Central Reserve Bank: Register of Bitcoin service providers (in Spanish)
Figures checked 8 November 2026. Prepared by InvestSalvador.com for general information. It is not investment, tax or legal advice; please confirm details with a qualified adviser before acting.
