On October 22, Argentinians will cast their votes to select their new president. One prominent candidate, Sergio Massa, who currently serves as the Minister of the Economy, has proposed introducing a central bank digital currency (CBDC) if elected. Massa is contesting under the banner of the Union for the Homeland (Unión por la Patria).
Argentina’s history of hyperinflation challenges has thrust monetary reforms to the forefront of election campaigns. In contrast to Massa’s CBDC proposal, his primary competitor, Javier Milei from the Libertarian Party (Partido Libertario), advocates for a more drastic measure: dissolving the central bank and shifting the nation’s economy to the US dollar.
While Massa’s win might bring the promise of a CBDC, the specifics of its rollout remain nebulous since Argentina is currently in the preliminary stages of CBDC research. Until the commencement of the election season, the CBDC topic had been largely dormant among political circles. Nonetheless, neighbouring Brazil, which boasts the most significant economy in South America, initiated CBDC trial runs involving 16 commercial banks as of March.
BRICS, in its August summit, extended an invitation to Argentina, along with nations like Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE, to gain full membership by 2024. The consortium has shown interest in bypassing the US dollar for international dealings, favouring local currencies instead. Illustrating this shift, India executed its maiden crude oil trade with the UAE in August, using rupees as opposed to dollars.
The future of Argentina’s affiliation with BRICS largely rests on the upcoming election results. A victory for Javier Milei, who is pro-dollar, could stall this association. Nevertheless, Argentina has already showcased its intent to diversify from dollar-centric transactions, having made payments for Chinese imports in Yuan as of April this year.
