The Argentine central bank has confirmed its intention to introduce digital peso legislation to guide its attempt for a mainstream rollout in the coming years.
The plans were shared by central bank director Juan Agustin D’Attelis Noguera in a public discussion aired on the local news channel Filo. According to Noguera, the Argentine central bank is putting in the finishing touches for a legislative framework for a central bank digital currency (CBDC).
Once completed, Noguera says the central bank will submit the framework to the Congreso de la Nacion Argentina—the nation’s lawmaking body—for deliberation and final passage into law. Although Noguera did not disclose a timeline for submission to parliament, he stated that the draft will be forwarded “as soon as possible.”
The decision to proceed with the development of a digital peso split Argentine voters during the presidential elections, with electorates pitching their tent for CBDCs or opting for a dollarization of the economy.
Sergio Massa, one of the presidential aspirants, has pledged to fast-track the development of CBDCs, citing financial inclusivity and lower payment costs as a reason to pursue the digital peso. Noguera hailed Massa’s plan to support CBDCs, noting that the traceability of the digital peso will assist the government in collecting taxes.
Conversely, several Argentinian citizens rallied behind Libertarian Party candidate Javier Milei over his plans to dollarize the economy. In his manifesto, Milei argues that conferring legal tender status on the U.S. dollar offers a solution to the economic woes faced by the country, advocating for the scrapping of the central bank.
The peso has been tagged “the worst performing currency” among emerging markets, losing a chunk of its value over the last 12 months. In response to the galloping inflation, thousands of Argentines have turned to the U.S. dollar and digital currencies to hedge their wealth, with Milei describing the peso as “ice in the Sahara.”
The central bank’s decision to fast-track CBDC development rather than opt for the dollarization of the economy could see Argentina well on its way to joining the BRICS coalition. However, with the elections heading to a run-off, the pendulum could swing either way as voters watch with bated breath.
Frantic rush for CBDCs
Several central banks have begun preliminary tests into digital versions of their national currencies, buoyed by the prospects of improved financial inclusivity metrics and cross-border payment functionalities.
Over 130 countries, making up 98% of the global economy, are mulling the prospects of CBDCs, according to a Reuters report. China has taken the lead with extensive trials for its digital yuan, while Russia is taking a hurried approach to circumvent Western sanctions for its invasion of Ukraine.
Analysts have pointed out that the staccato approach to CBDCs could adversely affect the interoperability of systems, with both the Bank for International Settlements (BIS) and the International Monetary Fund (IMF) pushing for minimum global standards.
To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.
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