Crypto News: President of Argentina Rejects Dollarization Plan
In a recent interview, the president of Argentina, Javier Milei, stated that he will not be implementing his dollarization plan in 2024. Although dollarization and free currency convertibility are his administration’s ultimate goals, Milei believes that it would be impractical to do so this year in order to clean up the country’s economy.
The Analysis of the President’s Decision on Crypto Dynamics
Milei is scaling back his libertarian reforms, including the closure of the Central Bank of Argentina (BCRA) and replacing the fiat currency. These promises made during his presidential campaign will have to wait until at least next year. The sanitization process of the BCRA is proceeding slower than expected, and the closure may not happen until the end of June.
The adaptation of the financial system model will also take a significant amount of time, potentially up to a year. However, Milei reaffirms that dollarization and the withdrawal of the Argentine peso remain fundamental objectives. He believes that the relatively small size of the Argentine monetary base will facilitate the implementation of dollarization.
Milei suggests the possibility of a “basket of currencies” instead of solely relying on the American dollar. This approach would neutralize the effects of a single country’s monetary policy. The issue has not been discussed with the International Monetary Fund (IMF), but they have approved a disbursement of $4.7 billion for Argentina as part of a refinanced payment plan for their debt.
Milei Challenges Argentina’s Political Order
Javier Milei’s reform initiative has divided Argentina as he challenges the political order. Argentine legislators have approved his package of reforms, which now heads to the Senate for further consideration. Milei’s rise to power stems from frustration with the country’s economic situation, including high inflation rates and widespread poverty.
However, these reforms face criticism. Opposition deputy Leandro Santoro warns about the dangers of unrestricted market reforms by citing the 2001 crisis. Despite the challenges, the IMF has supported Milei by approving a $4.7 billion bill for Argentina, signaling international confidence in his reform agenda.
La Rioja Relies on “Bocades” to “Survive”
The province of La Rioja is heavily dependent on fiscal redistribution and has a significant public sector workforce. Governor Ricardo Quintela has introduced the local currency “bocades” as a means to tackle the province’s fiscal problems and facilitate local transactions.
This initiative has faced criticism from economists and critics who question the feasibility of introducing a provincial currency in an economy already grappling with hyperinflation. The national government has declared the initiative illegal, straining the relationship between La Rioja and the central administration.
Despite challenges, Quintela remains firm in his position, believing that “bocades” could stimulate the province’s economy. However, skepticism persists, and there are concerns that this experiment could worsen Argentina’s financial instability.
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