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Argentine President Alberto Fernandez recently hinted that the country is open to the idea of adopting the world’s largest cryptocurrency, Bitcoin, and introducing a Central bank digital currency issued by the central bank.
Fascinated by initiatives for the crypto world, such as the recognition of Bitcoin as legal tender in El Salvador or the issuance of the country’s first batch of its CBDC by the Bank of Jamaica, President Fernandez supports modern digital assets by trying to bring innovation to Argentina.
During an interview with a local media outlet, he was optimistic about the use of cryptocurrencies, also adding that there was no reason to slow down or reject the evolution of the emerging class of digital assets.
He also added that the inflationary effect in the South American country could be canceled thanks to the benefits gained from cryptocurrencies.
Inflation is one of the most sensitive issues in Argentine politics. Fernandez inherited the second largest “wretched” economy, according to Bloomberg Global misery index, of the former president and businessman Mauricio Macri.
According to the country’s official inflation statistics, $ 100 Mex at the start of Macri’s tenure would equal $ 661 Mex today.
What’s more, data suggests that prices in general rose 25.3% in the first half of 2021 alone.
Bitcoin and a CBDC for Argentina
Despite Argentina’s strict monetary controls, the current president has a broader and more modern digital vision. Indeed, he noted the Growing Perception of Bitcoin as a Hedge Against Inflation in the wider global economy.
However, highlighting concerns about Bitcoin’s price volatility, he said cryptocurrencies are a socio-economic issue that should be approached with great caution.
While there is an opening on the part of the president to explore digital resources, the head of Argentina’s central bank, Miguel Pesce, seems to threaten a repression of the sector.
On August 10, during the Digital finance forum organized by the Argentinian Institute of Financial Executives (IAEF), Pesce hinted at some sort of upcoming regulation for bitcoin transactions and also pointed out that the central bank is working to find effective ways to warn novice investors about the dangers of cryptocurrencies.
For Pesce, bitcoin is not a financial asset because it is not backed by any asset and cannot guarantee a stable return, further believing that there could be a very unfair effect if this money comes from cryptocurrencies. mingled with the traditional foreign exchange market.
Pesce also rejected President Fernandez’s suggestion to adopt a central bank digital currency (CBDC).
The central bank’s goal is to prevent untrained or uninformed investors from engaging in cryptocurrencies, through precise regulation.
The president of Banco Central de la República Argentina (BCRA) said in this regard:
“We are concerned that (cryptocurrencies) are being used to generate undue profits on unsuspecting people.”
Interest in cryptocurrencies has grown significantly in Argentina in recent years, mainly because they can be used as indirect exposure to the US dollar, which protects investors in the country from the devaluation of the local currency, the Argentine peso. .
Besides bitcoin, even stablecoins such as IAD are popular among Argentine traders.
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