Argentina is open to adopting Bitcoin but country’s central bank head has rejected the idea
In an interview on Caja Negra, the president of Argentina, Alberto Fernandez, said he is amenable to the idea of crypto playing a more significant role in Argentina’s economy, despite his skepticism.
Argentina President Alberto Fernandez
Argentina is open to adopting Bitcoin
In the interview, when asked if he might consider making use of a central bank digital currency (CBDC) or maybe even emulate El Salvador and accept Bitcoin as a legitimate lender, Fernandez said, “I don’t want to go too far out on a limb, but there is no reason to say no. Perhaps that is a good path to take. They say the advantage is that the inflationary effect is largely nullified.”
Inflation is one of the most sensitive issues in Argentine politics. Fernandez inherited the second-most “miserable” economy in the world, according to Bloomberg’s World Misery Index, from the former president and businessman Mauricio Macri. According to the government’s data on inflation, $100 at the beginning of Macri’s term would be equivalent to $661 today.
Argentina also imposed strong currency exchange controls, causing a boom in the black market for foreign exchange – something very different from the Salvadoran reality, where the U.S. dollar is legal tender. However, Fernandez has tempered his interest in cryptocurrencies like Bitcoin as a potential hedge against inflation with a healthy dose of caution.
“It is a global debate, and I must confess that it is a topic that I approach with caution. In my case, there is caution because of how unfamiliar it is and because it is hard to understand how this fortune materializes,” he said, referring to how the value of Bitcoin has increased throughout the years. “Many people in the world have these concerns, and that is why the project, or the system, has not yet expanded more than it has. But it is something to consider,” said the president.
The head of Argentina’s central bank, Miguel Pesce
Even so, despite the president’s openness to exploring crypto, Miguel Pesce, the current president of the Central Bank of Argentina, appears to be threatening to crack down on the industry. Speaking during the Argentine Institute of Executive of Finance’s Digital Finance Forum on August 10, Pesce also stressed that the bank was working to find effective ways of warning novice investors about the dangers of putting their savings behind cryptocurrencies like Bitcoin.
Pesce stated on the issue it was essential to them to avoid linking bitcoin with the traditional exchange market, “We are going to regulate the intersection of Bitcoin with the payment system and the exchange market.”
To Pesce, Bitcoin is not a financial asset because it fails to be backed by any asset and cannot guarantee a stable yield. However, he ascertains that its scarcity allows the price to continue rising, giving the impression it is indeed a financial asset.
“The Central Bank is not affected by the fact that these types of instruments can be used for transactions,” he stated.
Interest in cryptocurrencies has grown significantly in Argentina in recent years. Beyond just Bitcoin, stablecoins such as DAI are also popular among Argentine traders. But Argentina is still a country big on cash. Over 90% of the transactions in the nation involve cash, so the bank has the challenge of modernizing this system to make payments more manageable. However, Pesce stated they were not planning to issue a CBDC for this task.
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