A presidential candidate, Sergio Massa, has promised to introduce a central bank digital currency (CBDC). According to him, CBDCs may solve Argentina’s inflation crisis.

Central Bank Digital Currencies (CBDCs) have emerged as a significant topic of discussion in global economics and monetary policy. These digital representations of a nation’s fiat currency are being explored by governments worldwide, each with its unique set of motivations and objectives. One such perspective comes from an Argentine presidential candidate who views CBDCs as a potential solution to the persistent hyperinflation problem in their country. 

Javier Milei, a pro-Bitcoin politician who wants to dissolve Argentina’s central bank, appears to completely disagree with Sergio Massa’s position on digital currencies issued by central banks.

In a presidential debate on October 2, Argentina’s second-place contender stated, “I am clear that inflation is a huge problem in Argentina,” before describing his solutions to the crippling inflation:

“We are going to launch the digital currency in Argentina. […] We will do it globally for all of Argentina accompanied by a laundering law allowing those who have money abroad to bring it and use it freely without new taxes.”

Massa, who currently serves as the Minister of Economy, shut down the idea that Argentina should move to the United States dollar:

“Dollarization is what generates the temptation of the dollar. Be patriots [and] defend our currency; do not promote the use of it [the U.S. dollar],” he said.

CBDCs and Argentina’s General Election

CBDCs May Solve Argentina’s Inflation Crisis

Argentina’s general election will take place on Oct. 22. Two of the three most significant polls indicate that Javier Milei, a pro-Bitcoin and anti-central bank candidate who won Argentina’s primary election in August, is marginally ahead of Massa in the general election.

According to data from the American think tank AS/COA, Milei has the majority of voters’ support in the country’s more rural areas. At the same time, Massa is likely to win the province of Buenos Aires, which is home to 16.6 million of the country’s 46 million inhabitants.

Milei has expressed a desire for Argentina to use the dollar as its official currency. Milei has always opposed central banking as an economist and libertarian. His election pledge included abolishing Argentina’s central bank.

In a recent article, Milei said that Bitcoin responded to “central bank scammers” and that the Argentine peso permitted politicians to defraud Argentines of their money through inflation.

If elected, Patricia Bullrich, Argentina’s third-place presidential contender, would reportedly pursue a monetary regime in which the Argentine peso and the U.S. dollar coexist as legal tender.

Argentina’s Inflation Crisis

CBDCs May Solve Argentina’s Inflation Crisis

Since December 2023, the value of the Argentine peso relative to the dollar has decreased by approximately 99%.

According to most data, Argentina has the third-highest inflation rate globally, only after Lebanon and Venezuela.

The Argentine presidential candidate’s proposition to use Central Bank Digital Currencies (CBDCs) as a remedy for hyperinflation highlights the evolving landscape of monetary policy and digital finance. While CBDCs promise greater control and transparency in managing a nation’s currency, their effectiveness in combating hyperinflation remains controversial.

It is clear, however, that the conversation surrounding CBDCs and their potential to reshape economic stability will persist. As we continue to witness the development and implementation of CBDCs globally, policymakers, economists, and the public need to consider their implications carefully. This consideration will help them determine whether they can solve economic challenges like hyperinflation.