Argentina’s unexpected strategy to combat inflation: Stop issuing legal currency peso! How is the progress of Bitcoin enthusiasts embracing BTC?

This site (120bTC.coM): Due to factors such as large government deficits, trade and foreign exchange controls, the South American country Argentina has long been plagued by inflation. The legal currency peso has continued to depreciate. Its annual inflation in 2023 The rate has soared by more than 200%, and the country's economy is very difficult.

Argentina Freezes Fiat Currency Supply

In order to speed up the solution to the inflation problem, the Argentine government stated on Saturday that the Argentine Central Bank will freeze the supply of the country’s fiat currency peso starting from this Monday (15) and issue peso in the foreign exchange market. When purchasing U.S. dollars, an equal amount of U.S. dollars is simultaneously sold in the parallel CCL foreign exchange market to balance Argentina's monetary base.

In response, Argentina’s Minister of Economy Luis Caputo said: Argentina will never print pesos again, which is a historic initiative. This new strategy will help further control inflation.

Caputo further explained: In currency competition, the world says that the market would rather choose the US dollar, but in fact the market is looking for scarce resources, and the Argentine peso will become a scarce resource, because taxes must still be paid in pesos. This would strengthen the peso and cause inflation to fall even more sharply.

President Javier Milei also said: Argentina’s monetary base will no longer increase. This is a very strong signal. This plan will accelerate the deflation process of the economy.

How is the progress of Bitcoin enthusiasts embracing BTC?

In addition to making a fuss about legal currency and foreign exchange, you may also remember that Argentine President Javier Milei, who was an economist, said before he won the election last year that he would close the central bank and use Bitcoin to save the Argentine economy. At that time, he proposed Specific ideas and actions include:

• Javier Milei has promoted the benefits of Bitcoin and cryptocurrency on multiple talk shows. He said that "Bitcoin can eliminate central banks."

• At the end of November last year, Javier Milei defeated Economy Minister Sergio Massa and won the election. After being elected, he once again showed his determination to close the Central Bank of Argentina (BCRA) on the X platform, saying that this was "non-negotiable" things.

• At the end of December last year, Argentina’s new Minister of Foreign Affairs and International Commerce, Diana Modino, announced on the X platform that Argentina had approved and confirmed that Bitcoin and other cryptocurrencies can be used as currencies for transactions in commercial contracts.

• In May this year, Argentina’s National Securities Commission held a formal meeting with El Salvador’s Digital Asset Agency to discuss how the country could adopt Bitcoin as a reserve currency.

Forbes: Javier Milei’s economic proposition lies in dollarization

However, whether Javier Milei is really advancing the policy of embracing Bitcoin seems to be negative at present. According to a report by Forbes in June, in fact, Javier Milei’s economic proposition is not to follow El Salvador’s example and use Bitcoin as legal tender, as widely reported in the media, but to first realize the dollarization of the economy.

Forbes continued to point out that in the meeting with El Salvador in May this year, Bitcoin was not even mentioned. Instead, the focus of the discussion between the two parties was the self-custody of crypto assets and the regulatory framework to create a good regulatory environment for cryptocurrencies. , it’s not really about using Bitcoin as the standard: Argentina’s central bank continues to deal with issues such as inflation, currency devaluation, and exchange controls, making the idea of ​​Bitcoin as a major currency even less feasible. Banks and payment service providers are still prohibited from offering any type of crypto services or products, including Bitcoin.

But taking a step back, it is also beneficial to provide Argentina with a good regulatory environment. After all, against the background of high inflation and the continuous depreciation of legal currency, USDT and BTC have become popular choices among local people, making the country the first in the Western Hemisphere. Countries with the highest cryptocurrency adoption rates.

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