Argentina’s frontline presidential candidate, Sergio Massa, has confirmed that he will be leaning on a central bank digital currency (CBDC) as an answer to the question of hyperinflation if elected as president.
Massa, running under the Union for the Homeland party platform, disclosed his ambitious plans during a televised presidential debate with opposition candidates present. According to Massa’s blueprint, a digital version of Argentina’s national currency will be followed by an anti-money laundering law and plans to review current taxation rules.
“We are going to launch the digital currency in Argentina,” said Massa. “We are going to do it globally for all of Argentina accompanied by a laundering law that allows those who have money abroad to bring it and use it freely without new taxes in parallel.”
The presidential aspirant argued that combining these factors will be key in reducing hyperinflation levels in the country.
Since 2003, the Argentine peso has lost 99% of its value against the U.S. dollar, earning it the worst-performing currency among emerging nations. Given the volatility of the peso, residents have turned to the U.S. dollar and digital currencies to hedge their wealth from hyperinflation.
“Be patriots [and] defend our currency, do not promote the use of it [the U.S. dollar],” said Massa.
Massa’s closest rival, Javier Milei, running under the Libertarian party, is pushing for a wholesale dollarization of the local economy. Milei’s economic blueprint will involve scrapping the central bank in its entirety over its failure to defend the interests of ordinary citizens.
Milei’s plan has garnered support from diverse quarters with two out of the three leading polls placing him in the lead. If Milei is elected president, there are fears that it could dent the nation’s plans to join the BRICS alliance, given the proposed dollarization of the economy.
BRICS have been steering away from using the U.S. dollar as the primary currency in international trade, with member nations using local currencies to facilitate exchange.
Third force presidential candidate Patricia Bullrich revealed that if elected, her administration will ensure that the peso and the U.S. dollar operate equally as legal tenders.
Argentina’s CBDC lags behind the pack
While other countries have adopted an active approach to their CBDC development, Argentina is still in the research phase, probing the viability of the offering. The country still needs to decide if it will proceed with a retail or wholesale CBDC, with technological, legal, and regulatory hurdles yet to be crossed.
Its neighbor Brazil has surged ahead with a CBDC pilot, earning impressive results after exploring multiple use cases. Argentina’s peers in the G20 have begun CBDC studies, leaving the country with a mountain to climb if it intends to close the gap.
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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