Is Argentina’s New President Brave Enough to Promote Bitcoin?
Argentina swore in libertarian capitalist Javier Milei as its new president yesterday. Hailing from the Austrian School of Economics, Milei once voiced support for Bitcoin as a solution to years of mismanagement in Argentina’s economy that could see inflation exceed 200% this year.
Milei now faces fiscal and social challenges that have seen many young citizens leave the country. He plans to cut government spending by 5% and signed a presidential decree to half the number of government ministries.
Javier Milei Faces Daunting Odds to Fix Argentina’s Economy
Inflation stemmed in part from a devaluation of the Argentinian peso caused a significant supply of bank notes circulating in the country. The country fired up its money printers after its ninth sovereign default prevented it from borrowing on capital markets.
Now, JPMorgan predicts the nation’s inflation could soon reach parity with Zimbabwe and Sudan. Alberto Ramos, an economist at Goldman Sachs, said that Argentina could be an emerging market success if Milei can pull off an unlikely coup.
“He may try to do the right thing but may not be able to. You are dealing with nitroglycerine. It can ignite overnight. Once you start the economic adjustment, you can lose control,” Ramos said.
According to Guido Moscoso, Public Opinion Manager at Opinaia, there have been only two liberal, pro-market reforms in Argentina in the last 50 years. To control the hyperinflation and potentially adopt Bitcoin, Milei will have to change the economy. But doing so and keeping his popularity is a feat that will require him to be “clever and pragmatic.”
But, just like other politicians who have promoted Bitcoin in the US and elsewhere, it is difficult to tell how successful Milei will be. Miami mayor Francis Suarez set news agencies abuzz by accepting a paycheck in Bitcoin but dashed hopes of White House support by pulling out of the 2024 presidential candidate race.
Read more: How To Accept Crypto Payments: A Brief Guide
Another Florida official, Governor Ron DeSantis, who passed an anti-central bank digital currency bill and voiced support for Bitcoin, will likely lose the state to former president Donald Trump. Anti-CBDC candidate Robert F. Kennedy recently decided to run as an independent candidate, potentially lowering his chances of winning.
Is Bitcoin the Solution to Argentina’s Hyperinflation?
During his run for the presidency, Milei promoted Bitcoin as a way for Argentina to dig its way out of the problems in its economy. A paper by the Financial Action Task Force and the Financial Stability Board earlier this year said cryptocurrencies allow people to bypass central bank policy. Still, Milei’s anti-central bank stance means he may not consider promoting crypto as damaging to fiscal policy.
El Salvador president Nayib Bukele recently celebrated the nation’s Bitcoin bet. The government currently holds around 2,700 BTC and has made $3 million in unrealized profits. It adopted Bitcoin as legal tender over advice from the International Monetary Fund, but Bukele remains defiant that buying Bitcoin was the right move.
Read more: What is Cryptocurrency Mining?
Other state efforts, like Bitcoin mining projects undertaken in Bhutan, have embraced the technology to boost the region’s education sector. The project’s success will depend on how events like the upcoming halving affect mining profitability.
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