“Argentina recently expressed support for the promotion of central bank digital currency (CBDC) as a national economic remedy to help Argentina stabilize the economy and benefit national taxation.”
Argentina's inflation has exceeded three digits, making life miserable for its people.
As one of the solutions to this extreme situation, Juan Agustín D’Attellis Noguera, governor of the Central Bank of Argentina, recently made comments on a local TV station, publicly supporting Economy Minister Sergio Massa’s plan to promote the central bank’s digital currency (CBDC) as a national economic remedy, and said he believed that the “digital peso” (PAD) could help Argentina stabilize its economy as early as 2024.
1. The traceability of CBDC is beneficial to government taxation
Governor Noguera first said that the key feature of the central bank’s digital currency is traceability, which will help the government collect taxes:
By tracing digital currency operations, even if it is unknown who performed these operations, there is evidence that these operations have been completed, so the taxable amount can be expanded. This will be able to raise more funds without having to increase taxes, and may even reduce taxes.
Noguera also believes that CBDCs could help solve the country’s currency problems, as the local legal tender, the Argentine peso, is extremely unstable due to extreme inflation and has to compete with the U.S. dollar for payments.
Finally, Noguera assured that Argentina will gradually introduce CBDC to coexist with cash and completely replace paper fiat currency in the final stage of the project.
However, compared with his optimism, many financial experts believe that even embracing CBDC will not bring much help to stabilizing the economy. After all, the country’s real problems are an unsound political system and broken financial policies, coupled with a serious shortage of foreign exchange reserves, which are not something that CBDC can solve in one fell swoop.
2. Bitcoin-friendly presidential candidates lead in primary elections
We know that Argentina is a country with extremely serious inflation.
Economist Carlos Perez said in a report in early June that Argentina's inflation rate is expected to reach a staggering 147% in 2023, so people are urgently looking for alternative solutions to prevent their wealth from shrinking.
It is worth noting that Argentine presidential candidate Javier Milei chose to promote Bitcoin in solving the country's currency crisis, and Massa, who is also a presidential candidate, also promised to launch a CBDC to solve Argentina's inflation crisis if elected president.
In the primary election held in August, Javier Milei ranked first with 31.57% of the votes, greatly increasing his chances of successfully running for president. If this is true, Argentina may become more friendly in embracing cryptocurrencies in the future.
Note: Argentina will hold the first round of presidential election on October 22!
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✏️Disclaimer: This article is for reference only, DYOR
📄Source: Alpha Investment Research, Zhang Joy
I made my first pot of gold in the cryptocurrency world through investment research at Alpha A10!
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