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After taking office, the new right-wing liberal president of Argentina, Javier Milei, announced a series of radical economic shock therapy measures. Not only did he devalue the Argentine peso by more than twice its value, but he also froze all public works and cut government spending, triggering protests and expressions of dissatisfaction from the public. Milei, who advocated for the abolition of the Argentine peso and called for economic 'dollarization' before the election, seems to have abandoned this path but allows contracts to be signed using Bitcoin and other cryptocurrencies.
The Argentine peso has depreciated threefold from the beginning of the year to now, facing the dilemma of rampant inflation with a projected inflation rate of 147% in 2023. The official exchange rate of the Argentine peso (ARS) has depreciated from 176 to 1 against the US dollar at the beginning of the year to 366 to 1, a depreciation of more than twice. The country's Minister of Economy, Luis Caputo, lowered the official exchange rate to 800 in a televised speech last week, stating that the central bank's goal is to devalue by 2% per month. Caputo said these measures were welcomed by the International Monetary Fund (IMF) and would be painful in the short term but necessary to reduce the country's fiscal deficit and curb soaring triple-digit inflation.
Use Bitcoin and other cryptocurrencies to sign contracts
Diana Modino, Minister of Foreign Affairs and International Trade of Argentina, wrote on the X website: 'We approve and confirm that in Argentina, you can sign contracts with Bitcoin.' She added that this is based on Article 766 of the obligations of the debtor, which requires the debtor to deliver the specified amount of the designated currency, regardless of whether the currency is the legal tender of the Republic. Therefore, in addition to Bitcoin, other cryptocurrencies or anything else, such as a few kilograms of beef or a few liters of milk, can be used.
Modino did not provide details of any new measures the government may plan related to cryptocurrencies, but the early recognition of the world's largest cryptocurrency and the recent views of the newly elected president Milei on currency policy when the local currency faces rampant inflation and serious issues are consistent—that is, devaluation.
Milei announces radical economic shock therapy
Javier Milei, the new president of right-wing liberalism, is deeply convinced that privatization and a free market are the only solutions to save Argentina. On the 20th, during a nationwide television speech, he announced the details of a series of so-called 'economic shock therapy' measures, including cutting government spending, privatizing state-owned enterprises, relaxing mining regulations, canceling rent regulations, removing export restrictions, and significantly devaluing the currency.
After the new policies were announced, despite receiving recognition from the International Monetary Fund (IMF), which said it was an important step for Argentina to restore stability and rebuild the national economy, there was a wave of soaring prices across the country. For example, meat prices rose by 40%, Shell increased fuel prices by 37%, and Argentine Airlines directly doubled ticket prices.
His radical policies also triggered a backlash from the public. Large groups of protesters demonstrated throughout the night in the capital, and whether the new government's economic policies could bring a glimmer of hope to Argentina can only be proven over time! |
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Post time 26-12-2023 20:52:15