Argentine President Alberto Fernández 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 in favor of the world of cryptocurrencies, such as the recognition of Bitcoin as legal tender in El Salvador or the issuance of the country's first batch of CBDC by the Bank of Jamaica, President Fernández supports modern digital assets by trying to bring Argentine innovation.
During an interview with a local news outlet, he was optimistic about the use of cryptocurrencies, adding that there is no reason to slow down or reject the evolution of the emerging digital asset class.
In addition, he also added that the inflationary effect in the South American country could be canceled thanks to the benefits derived from the cryptocurrency.
Inflation is one of the most sensitive issues in Argentine politics. Fernández inherited the second largest economy "miserable" of the world, according to the Bloomberg World Misery Index, of the former president and businessman Mauricio Macri.
According to the country's official inflation statistics, $ 100 at the beginning of Macri's term would be equivalent to $ 661 today.
Not only that, the data suggests that overall prices rose 25.3% in the first half of 2021 alone.
Bitcoin and a CBDC for Argentina
Despite Argentina's strict currency controls, the current president has a broader, more modern and digital vision. In fact, he pointed out the growing perception of Bitcoin as a hedge against inflation in the global economy in general.
However, highlighting concerns about Bitcoin price volatility, he stated that cryptocurrencies are a socio-economic issue that should be approached with great caution.
Although there is an opening of the president to the exploration of digital assets, the director of the Argentine central bank, Miguel Pesce, appears to be threatening to crack down on the sector.
On August 10, at the Digital Finance Forum organized by the Argentine Institute of Finance Executives (IAEF)Pesce hinted at some kind of upcoming regulation for bitcoin transactions and also noted that the central bank was working to find effective ways to warn novice investors. of the dangers behind cryptocurrencies.
For Pesce, Bitcoin is not a financial asset because it is not backed by any asset and cannot guarantee a stable performance, further believing that there could be a very unfair effect if this cryptocurrency money was mixed with the traditional currency market.
Pesce also rejected President Fernández's suggestion to adopt a central bank digital currency (CBDC).
The central bank's goal is to prevent ill-prepared or misinformed investors from committing cryptocurrencies, through precise regulation.
The president of the Central Bank of the Argentine Republic (BCRA) expressed precisely with regard to these types of dangers:
"We are concerned that cryptocurrencies are being used to generate undue profit for unsuspecting people."
Interest in cryptocurrencies has increased significantly in Argentina in recent years, mainly because it can be used as an indirect exposure to the US dollar, protecting investors in the country from devaluing the local currency, the Argentine peso.
In addition to Bitcoin, stable coins What DAI they are also popular with Argentine merchants.