Argentina’s new right-wing liberal President, Javier Milei, has announced a series of radical economic shock therapies upon taking office. Not only did he devalue the Argentine peso by more than half, but he also froze all public works and reduced government spending, sparking protests from the public. Prior to his election, Milei had expressed support for abolishing the Argentine peso and advocated for economic “dollarization.” However, he now allows contracts to be signed using Bitcoin and other cryptocurrencies.
Table of Contents:
Toggle
Argentine Peso Devalued Threefold Since the Beginning of the Year
Contracts Can Be Signed Using Bitcoin and Other Cryptocurrencies
Milei Announces Radical Economic Shock Therapy
Argentina is facing the dilemma of hyperinflation, with a projected inflation rate of 147% in 2023. The Argentine peso (ARS) has devalued from 176 pesos to one US dollar at the beginning of the year to 366 pesos to one US dollar, a devaluation of over 100%. Last week, the Minister of Economy, Luis Caputo, directly lowered the official exchange rate to 800 pesos per US dollar in a televised speech, stating that the central bank’s goal is a 2% monthly devaluation. Caputo stated that these measures have been welcomed by the International Monetary Fund (IMF) and, although painful in the short term, are necessary to reduce the country’s fiscal deficit and lower triple-digit inflation.
Advertisement – Continue reading below
Diana Modino, the Minister of Foreign Affairs and International Trade of Argentina, stated on the X website:
“We approve and confirm that in Argentina, you can sign contracts using Bitcoin.”
She added that this is based on Article 766 of the debtor’s obligation, which states that the debtor must deliver the specified currency, regardless of whether it is the legal currency of the Republic. Therefore, this includes cryptocurrencies other than Bitcoin or anything else, such as a few kilograms of beef or a few liters of milk.
Modino did not provide details of any new measures the government may plan regarding cryptocurrencies, but the early recognition of the world’s largest cryptocurrency and the newly elected President Milei’s view on currency policy in the face of hyperinflation and severe problems with the local currency are consistent – devaluation.
Javier Milei, the new President of Argentina and a right-wing liberal, firmly believes that privatization and a free market are the only solutions to rescue Argentina. On the 20th, he announced a series of detailed “economic shock therapies” in a national television speech, including cutting government spending, privatizing state-owned enterprises, relaxing mining regulations, abolishing rental regulations, lifting export restrictions, and significant currency devaluation.
Although the new policies received recognition from the International Monetary Fund (IMF), which stated that they are an important step towards stabilizing and rebuilding the country’s economy, they have resulted in a wave of price increases throughout Argentina. For example, meat prices have increased by 40%, Shell has raised fuel prices by 37%, and Argentine Airlines has directly doubled ticket prices.
The intense policies have also sparked public backlash, with large groups of protesters demonstrating overnight in the capital city of Buenos Aires. Only time will tell if the new government’s economic policies can bring a glimmer of hope to Argentina.
Javier Milei
Bitcoin
Argentina
Argentine Peso
Further Reading
Argentina’s President-Elect Javier Milei to Implement Economic Shock Therapy
Bitcoin Adoption in Argentina Increasing, Presidential Candidate Javier Milei Positive Towards Cryptocurrencies