El Salvador is the first country in the world to have declared Bitcoin legal tender, and the new President of Argentina during the election campaign promised that he would consider the possibility of following their example.
Since his election several months ago, Milei has not yet done anything regarding Bitcoin.
Things, however, might be on the verge of changing.
Summary
Peso: The problem of the local currency
“`htmlEl Salvador has not had its own local currency since 2001. Since then, it has always used the US dollar as its legal tender fiat currency, so it was not particularly difficult to decide at some point to also add Bitcoin among the country’s legal tender currencies.
“`For Argentina, however, the discourse is a bit more complex.
In fact, the country still has only one legal tender currency, its Peso argentino (ARS).
Tuttavia si tratta di una valuta che, sebbene circoli ancora effettivamente in Argentina, ha perso e sta perdendo molto del suo potere di acquisto.
The problem is that inflation in Argentina has risen to almost 300%, while a year ago it was at 114%, and at the end of 2020 it was at 36%.
However, to return to values commonly considered more acceptable, we need to go back to the end of 2015, when it was already above 14%. To return to 5%, we need to go back to 2009, and to return to 3%, we need to go back to 2003, which is 21 years ago.
With such a rate of internal devaluation, the loss of purchasing power of the Argentine peso is an increasingly serious problem, especially for those with fixed incomes.
To try to contain the problem, many Argentinians now simply use US dollars instead of pesos, but total replacement is still far from happening.
The solution of Milei
La soluzione proposta dal nuovo presidente Javier Milei è semplice: fare come in El Salvador e smettere di utilizzare la valuta locale, abbracciando appieno la dollarizzazione del Paese.
In El Salvador in effetti ha funzionato, perchè utilizzare una valuta stabile, anche se estera, è molto meglio che utilizzare una valuta locale che continua a perdere gran parte del suo potere di acquisto.
Tuttavia sebbene Milei avesse promesso in campagna elettorale la chiusura della banca centrale argentina (Banco Central de la República Argentina, BCRA), e la dollarizzazione del Paese, non è ancora riuscito ad intraprendere questo percorso, perché in Parlamento non ha una maggioranza assoluta che lo appoggi.
However, the Argentine Parliament might soon realize that for Argentinians, using a foreign but stable fiat currency could still be much better than having to use a national currency that continues to lose value. Therefore, sooner or later, Milei might manage to get the Parliament’s green light to close the BCRA and stop the use of the Argentine peso.
At that point, dollarization would be inevitable, as it was in the early 2000s in El Salvador.
Argentina: Bitcoin as the same solution as El Salvador
Once dollarization has occurred, Argentina might decide to follow El Salvador in the initiative of adding Bitcoin to the legal tender currencies in the country, thus having dollar and BTC instead of the Peso.
In this regard, the Argentine regulatory authorities recently spoke with their counterparts in El Salvador about the adoption of Bitcoin, as confirmed directly by the National Securities Commission of Argentina (CNV) and the government of the country with an official press release.
In the press release it is stated that the president and the vice president of the CNV, Roberto E. Silva and Patricia Boedo, met with the president of the National Commission for Digital Assets (CNAD) of El Salvador, Juan Carlos Reyes.
The comunicato also adds in an explicit and unequivocal way:
“they turned to the experience of the Central American country of being the first in the world to adopt Bitcoin as legal tender”.
So not only was the theme of the meeting precisely to explore the possibility that Argentina could also declare Bitcoin legal tender, but it seems that the input for this initiative was governmental, that is, it came directly from Milei himself. After all, the new president has never hidden his favorable judgment of Bitcoin.
The presidente della CNV, Roberto Silva, ha dichiarato:
“El Salvador has emerged as one of the leading countries, not only in the use of Bitcoin, but it has also distinguished itself in the world of crypto assets.
He created a specific commission, the National Commission for Digital Assets (CNAD), and therefore has very valuable experience for the CNV at this moment.
We want to strengthen ties with the Republic of El Salvador and for this reason, we will explore the possibility of signing collaboration agreements with them.
These statements really make one think that in Argentina they are taking things seriously, even if it is still definitely too early to imagine a real declaration of Bitcoin as legal tender in the country.
The vice president Patricia Boedo moreover has also been on an official visit to El Salvador recently, and has stated that she had the opportunity to exchange experiences during that visit, so much so that she considers it essential to continue strengthening ties with a Republic that is a pioneer in the field and that now has extensive experience.
Given that El Salvador is becoming the main crypto hub of all Latin America, it is not to be excluded that Argentina might want to try to do something similar.
