The only logic I have heard is that El Salvador receives a large amount of remittances from the USA, from which banks and Western Union take a big cut.

But Nayib Bukele is an autocratic president, which is making El Salvador less democratic by the day. In this case I think it's fair to blame the Bitcoin stuff to incompetence and/or corruption.

El Salvador isn't in South America.

He’s not.

He fell for the 1% fallacy, he spoke at a cryptocurrency conference a while back and said “BTC is worth X, imagine if we can get just 1% of that in inward investment!”