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Argentina’s President Open to Adopting Bitcoin and CBDC

cryptoknowmics.com 13 August 2021 03:30, UTC

Argentina’s President Alberto Fernandez has suggested that adopting Bitcoin and CBDC could be a “good path” for the country. In an interview with local media outlet Caja Negra, Fernandez responded to a question that asked whether he would consider the use of a central bank digital currency (CBDC) or even legalize BTC as El Salvador did in June.

“I don't want to go too far out on a limb [...] but there is no reason to say no,” Fernandez stated while adding”. “Perhaps that is a good path to take. They say the advantage is that the inflationary effect is largely nullified"

Argentina’s President Open to Bitcoin But Central Bank Hints at Regulations

For a long time now, Argentina’s economy has been battling severe inflation that has put the breaks on future growth. As per Bloomberg’s Misery Index, Fernandez inherited the world’s second most miserable economy from his predecessor, businessman Mauricio Macri. Government data shows that the country’s currency has declined to the extent that 100 pesos from 2019 would be equivalent to 661 pesos today.

Cryptocurrencies have become increasingly popular for their ability to hedge investments against inflationary pressures. The Argentinian president also commented on this perception, while maintaining his skepticism:

“There is caution because of how unfamiliar it is, and because it is hard to understand how this fortune materializes. Many people in the world have these concerns, and that is why the project, or the system, has not yet expanded [more than it has]. But it is something to consider."

Argentina’s Central Bank Indicates It Might Regulate BTC Transactions Soon

Despite the president’s willingness to embrace digital assets, Argentina’s central bank hinted that it is looking to clamp down on the industry. Miguel Pesce, the current governor of Argentina’s central bank, indicated Thursday that the institution might regulate Bitcoin and Bitcoin transactions.

Delivering an address to the digital financial conference organized by the Argentine Institute of Finance Executives (IAEF), Pesce said:

“We are going to regulate the intersection of Bitcoin with the payment system and the exchange market.”

He also asserted that Bitcoin is not backed by any asset and therefore cannot assure a stable return on investments. In his view, cryptocurrencies could be “very detrimental” for financial stability and a “very damaging for the instrument.”

By regulating the crypto industry, the central bank wants to shield “low sophistication investors” from dealing in volatile assets, Pesce emphasized. He also dismissed reports of a potential CBDC from the institution.

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