Argentina dreams of Bitcoin, but central bank balks

Adopting Bitcoin in Argentina? President Alberto Fernandez sees no reason why not. It’s not a real financial asset, the central bank counters.

Bitcoin is of great interest to South American economies plagued by inflation. El Salvador was the first country in the zone to take the plunge and make BTC a legal tender. This decision is not well received by the World Bank and the IMF.

Another country is also considering adopting BTC, but also a CBDC (central bank digital currency): Argentina. Its president, Alberto Fernandez, interviewed by a local TV channel, declares himself in any case favorable.

No “reason to say no” to Bitcoin

“I don’t want to get too far ahead of myself […] but there’s no reason to say no,” the leader replies cautiously. “It may be a good way to go,” he adds. Such a decision would be motivated primarily by the fight against inflation.

“They say the advantage is that the inflationary effect is largely cancelled out,” argues Alberto Fernandez. It is true that inflation is a scourge in Argentina, as in its South American neighbours.

The new president inherits a fragile economy. According to government data, Fernandez’s predecessor, Mauricio Macri, let inflation run rampant. 100 dollars at the start of Macri’s term would be equivalent to $661 today.

The loss of purchasing power for Argentine households is therefore considerable. Argentina is nevertheless cautious about the remedies that Bitcoin and cryptocurrencies could provide in this context.

Cryptocurrency ‘highly detrimental’ to financial stability

“This is a global debate, and I must admit that it is a subject [that I approach with] caution. In my case, the caution is due to the fact that it is an unfamiliar subject and it is difficult to understand how this wealth materializes,” justifies the current Argentine president.

Moreover, the leader will not be able to count on the support of the country’s central bank. Its president, Miguel Pesce, makes no secret of his hostility to the BTC. He thus agrees with his counterparts in other countries.

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For Pesce, Bitcoin is simply not a real financial asset, and does not generate any sustainable profitability. The president of the Bank of Argentina even wants to tighten regulations on the interaction between Bitcoin, the payment system and the foreign exchange market.

Indeed, the central banker believes that the cryptocurrency ” could be very detrimental ” to national financial stability. But Pesce refutes in oThe European Commission is also considering the possibility of issuing a central bank’s digital currency.