Javier Milei, a prominent contender in Argentina’s presidential race, plans to prevent a sovereign debt default by shutting down the Central Bank if elected. His primary victory sent shockwaves through the markets, causing asset sell-offs and a record surge in Bitcoin amidst the peso’s decline.
Milei’s strategy, outlined in an interview with Bloomberg News, involves massive spending reduction, equivalent to 13% of the Gross Domestic Product by mid-2025. This includes streamlining of public projects, the slashing of subsidies, and the removal of capital constraints, allowing businesses to conduct USD transactions. Going even further, he plans to close the Central Bank, claiming it has “no reason to exist,” and adopt the US Dollar as the currency for the $640 billion economy.
The primary election, which is an indicator for the October election, saw the peso devalued by 18% and a record-breaking Bitcoin surge. In his first interview with international media, Milei criticized the Central Bank, calling it “the worst garbage that exists on this Earth,” and proposed a transition to dollarization, following the example of El Salvador and giving individuals the option to choose their preferred currency.
Should he win the presidency, Milei intends to entrust economist Emilio Ocampo with the responsibility of overseeing the closure of the Central Bank and engaging in discussions with the International Monetary Fund. He also has no intentions of requesting more funds from the IMF.
Cryptocurrencies have been gaining popularity in Argentina, as indicated by Chainalysis which ranked the nation as the tenth most significant hub for cryptocurrency adoption worldwide last year. This record-breaking Bitcoin surge occurred as the peso depreciated and the nation grapples with one of the globe’s highest inflation rates.
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