Have yet to travel to Argentina myself, but I’d like to in 2024 for a couple of months at least.
I’m wondering if those of you who are familiar with the situation could share your thoughts on how the change in leadership may impact DNs.
Have yet to travel to Argentina myself, but I’d like to in 2024 for a couple of months at least.
I’m wondering if those of you who are familiar with the situation could share your thoughts on how the change in leadership may impact DNs.
The plan is to dollarize over about 12 months. Initially it will be driven by the people. Currently Argentina caps exchange to $200 per day (iirc). This has created a grey market. So all they have to do is remove this cap. People will rush to exchange their pesos for dollars. Eliminating this market will immediately make people better off by eliminating the grey market transaction time and fees. This will kick of dollarization.
The next step is to remove all the artificial exchange rates, Argentina has a bunch based on industry. More savings, more dollarization, better trade. As well as other trade barriers and regulations.
The plan is let the consumer economy drive dollarization until it reaches 2/3s of the money supply at which point the government will kick in and dollarize its accounts.
That’s the gist of it at least.
It may make things more expensive just like the euro did to Europe but it will create a stable growing economy. It’ll take a lot more but when you have runaway inflation for decades, it’s a start.
RemindMe! 1 year “curious to see the outcome, not debating the prediction/projection”
The biggest problem with this is that they don’t have anywhere near enough dollars on hand to lift the cap.
IMO you won’t see a cap entirely removed. He will want average Argentinians to be able to convert all of their money, but theres a good chance he will burn the elite and turn a chunk of their money to toilet paper. There’s not a compelling reason to let them convert all of their money when you could just burn them reducing the money supply and combating inflation.
I’m glossing over details. How they do it exactly we’ll have to wait and see. Dollarization wont fix everything. It’s main purpose right now is to stabilize inflation and the economy. But reforms to government , trade, etc are just as important.
per month