The president of Argentina — Javier Milei has confirmed that his administration’s decision to shut down Argentina’s central bank is ‘not a negotiable matter’. The leader, whom was just elected this week described central banks as a scam and intends to replace the Argentine Peso with the U.S. dollar. The U.S. dollar is issued by a central bank as well (the Federal Reserve). The national currency of Argentina has suffered annual inflation rates exceeding 124% this year (124.4% in September), rendering it non-viable for use as a currency.
Milei has also expressed an interest in Bitcoin. Argentina will join El Salvador in the list of countries that use the U.S. dollar as their official currency. El Salvador currently uses both the U.S. dollar and Bitcoin as legal tender. It’s unclear whether Argentina will adopt Bitcoin as legal tender like El Salvador did. However, the president’s enthusiasm about it suggests that may be on the table.
Replacing your own country’s currency with that of another currency has clear disadvantages, including the fact that you will be subjected to the other country’s inflation. However, the move to switch to the dollar may garner support as the Argentine Peso’s inflation rate makes it an unsafe currency to hold.
