The move to digital money has caught the eye of the Central Bank of Argentina, which recently endorsed Sergio Massa’s proposal for a Central Bank Digital Currency (CBDC) as a solution to the nation’s intensifying inflation. Known as the ‘digital peso’, this digital currency brings the promise of an abundant tax base without the need for increased tax rates.
Juan Agustín D’Attellis Noguera, a director at Banco Central de la República Argentina, sketched a vision of a new tax regime with operational traceability courtesy of blockchain technology. The initiation of the digital peso would be a gradual process; first, it would operate alongside the traditional fiat currency in a series of trials including participation from both private and public sectors. Provided that the trials are successful, the digital peso could eventually replace the traditional peso entirely.
Facing annual inflation rates of over 100%, the Argentinian government is exploring ways to make the peso a more competitive payment method compared to the dollar. Instead of burdening citizens with higher taxes during this economic hardship, a broader tax base could help ease the pressure.
With an impending general election, inflation remains a vital issue on every electoral campaign agenda. Minister for Economy Massa, who supports a digital central currency to help bolster economic policies, is also an avid advocate for combating the favoritism of Bitcoin in the era of digital cross-border transactions.
However, Massa’s counterpart, Javier Milei, leans more towards the widespread adoption of the digital currency BTC. Milei, currently leading in the polls, has criticized Argentina’s central bank for its perceived non-activity during the country’s struggle with hyperinflation. He has additionally suggested that fiat operates solely as a tool for the government to enrich itself, recommending the total abolishment of the central bank in favor of a more dollar-centric system.
While Massa is promoting a ‘patriotic defense’ against dollarization, Milei believes in the eradication of government control over the economy via adoption of dollarization and cryptocurrencies. This dispute challenges the country to reconcile technological advancements and economic stability while ensuring the prosperity of its citizens. However, the question still stands: Is a CBDC the solution to Argentina’s economic quandary, or will it merely serve as another tool for governmental control?
Source: Cryptonews
