Sergio Massa Proposes National Digital Currency and Tax Reduction
Sergio Massa, an Argentine economy minister and presidential candidate, has revealed his plan to launch a national digital currency, which local media has dubbed the “crypto peso.” If elected, Massa aims to implement this new currency alongside a tax reduction for transactions made using it.
Massa’s Proposal for an Argentine Digital Currency
During the first presidential debate, Massa announced his intention to create an Argentine digital currency. He emphasized that this proposal would enable all of Argentina to engage in economic activities using their mobile phones or cards. However, Massa did not provide specific details about whether the plan involves digitizing the existing peso or introducing a central bank digital currency (CBDC).
Combatting Tax Evasion through Digitization
Some analysts have suggested that the objective of digitizing the Argentine currency is to bring transactions into the formal market and combat rampant tax evasion. Last year, banker Carlos Maria De Los Santos proposed a similar idea, highlighting that tax evasion rates currently stand at approximately 50%. Full digitization could potentially contribute up to 20% annually to the country’s economy.
A Response to Dollarization
Javier Milei, a libertarian candidate who won the preliminary elections in August, has advocated for dollarization as a means of stabilizing Argentina’s soaring inflation rate, which reached 124% on a yearly basis in the same month. While experts have criticized Milei’s dollarization plan, his focus on reducing the size of the state and implementing this policy has propelled him to the top of the polls with an 11% advantage just four weeks before the first round of elections.
Hot Take: The Future of Argentina’s Currency
Sergio Massa’s announcement of a national digital currency demonstrates his commitment to embracing technological advancements in the financial sector. By introducing a crypto peso and reducing taxes for transactions made using this digital currency, Massa aims to promote economic growth and combat tax evasion. However, the lack of specific details regarding the nature of the digital currency leaves room for interpretation and raises questions about its potential impact on the economy. As Argentina approaches its upcoming elections, the contrasting proposals of Massa and Milei reflect different visions for the country’s monetary future.
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