Closing Central Bank is Non-negotiable says pro-bitcoin Argentina Pres Milei

[OgNasty]

I know it's been said here and several other places across the internet and probably in print too but this is more then likely going to be a disaster for Argentina.
The US central bank (Federal Reserve) is designed and setup to help the US. Not Argentina or any other country. You can't just go along for the ride. They FR can and will do things that are great for the US economy they can and will do things that may be not great for the US economy and everything in between.

How it will effect Argentina's economy is not important to them and if they do something that is good for the US but sinks Argentina into a decade of financial ruin. Then well it sucks to be them not our problem.

-Dave

Interesting take. I thought everybody was looking forward to seeing Argentina ditch the central bank to find their own solution. It has so far seemingly worked well for El Salvador, so Argentina has a guide to show them how they could be successful adoption Bitcoin as their national currency. I think predicting total disaster may be premature.

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[stompix]

So BRICS just went PIECES?  
And the famous de-dollarization turns out to be a dollarization after all ?
What a surprise! /s

Now the really surprising thing is how many bitcoin users are coming out sand say that we need Central Banks that we need a Central bank for a country to function, that some must have their freedom of printing money....lol, for real?

The US central bank (Federal Reserve) is designed and setup to help the US. Not Argentina or any other country. You can't just go along for the ride. They FR can and will do things that are great for the US economy they can and will do things that may be not great for the US economy and everything in between.
How it will effect Argentina's economy is not important to them and if they do something that is good for the US but sinks Argentina into a decade of financial ruin. Then well it sucks to be them not our problem.

I think that's a bit of exaggeration, and mainly because two things
- the FR might f* u Argentina for 10 years but the current CB and government have done it for 40
- what the FR does might be good for the US and bad for Argentina, but looking at how diverse the US is, what's good for California and bad for Argentina might be an apocalypses for Montana, and we have an even better picture with the EU, some decision might suck for some but it's well better than how it was a few decades ago. Yeah 5-10% inflation sucks but coming from 100% in the 90's it's like a spa trip.

Interesting take. I thought everybody was looking forward to seeing Argentina ditch the central bank to find their own solution. It has so far seemingly worked well for El Salvador,

Salvador still has a central bank.
https://www.bcr.gob.sv/

[DaveF]

I know it's been said here and several other places across the internet and probably in print too but this is more then likely going to be a disaster for Argentina.
The US central bank (Federal Reserve) is designed and setup to help the US. Not Argentina or any other country. You can't just go along for the ride. They FR can and will do things that are great for the US economy they can and will do things that may be not great for the US economy and everything in between.

How it will effect Argentina's economy is not important to them and if they do something that is good for the US but sinks Argentina into a decade of financial ruin. Then well it sucks to be them not our problem.

-Dave

Interesting take. I thought everybody was looking forward to seeing Argentina ditch the central bank to find their own solution. It has so far seemingly worked well for El Salvador, so Argentina has a guide to show them how they could be successful adoption Bitcoin as their national currency. I think predicting total disaster may be premature.

But they didn't find their own solution. They are piggybacking on someone else's. Their GDP is only $490 billion and a lot of places report that to be an inflated number.
Assuming it's true they have the economy of a medium US state. But here all the states play along with mostly the same rules.

Argentina has their own rules. So even minor things like money movement can matter. Banks here have to report cash movement over $10k and a bunch of other things. If Argentina  does not play by those same rules how long till people figure out it's a great place to launder money, then how long till other repercussions happen.

How will businesses in the financial sector in Argentina work with that in terms of interest rates and liquidity?
How will trade partners work with this? What exchange rate will be fixed with contracts that were on their old currency? What if they are trading with a US sanctioned country?
And so on. It's a long path to get it done.

I'm not saying it will not work out. Just pointing out that it's not a magic we are going to do this thing and it will work out. There are 1000s of moving parts that have to be figured out 1st.

I think that's a bit of exaggeration, and mainly because two things
- the FR might f* u Argentina for 10 years but the current CB and government have done it for 40
- what the FR does might be good for the US and bad for Argentina, but looking at how diverse the US is, what's good for California and bad for Argentina might be an apocalypses for Montana, and we have an even better picture with the EU, some decision might suck for some but it's well better than how it was a few decades ago. Yeah 5-10% inflation sucks but coming from 100% in the 90's it's like a spa trip.

But the FR would not be able to pass something that is an apocalypse for Montana. That is kind of the point. It might be not great for Montana and perhaps actively bad for Utah. However, they would not allow a state / regional economy to implode since it would take more states with it. Doing something that causes Argentina to fall off the globe and Chile is now the southern tip of South America does not enter into the US FR thinking.


-Dave

[kryptqnick]

Well, considering how the local fiat has been doing in Argentina (not great since the start of the 21st century and really-really bad since 2018), it's not surprising that he's planning to shut down the Central Bank. I don't know if it's within his power as the president to do so, but the idea makes sense. Shutting down the Central Bank, however, doesn't mean that they'll adopt Bitcoin as their main currency. Maybe he wants another authority to try launching a new coin; maybe he'll switch to another country's relatively stable fiat; maybe he'll let the local currency go into free-fall for the market to determine its price. I really hope that whatever he ends up doing improves the situation or, at least, doesn't make it worth.

[wxa7115]

I'm a bit skeptical of this news, and am undecided as to whether him closing down Argentina's central bank is going to be a good thing or bad thing at the end of this.

Of course, he better replace it with something else, and quickly, because I don't think a government can function properly without a financial organ of its own.

You have my thought on this Argentinian new regime, I'm also wondering how the new president will fulfill his electoral promises. I don't know how a country can function financially without a central bank, if perhaps he's talking about a total overhaul of the financial system, that is understandable. So how does he run their financial system without a central body? Who will regulate the cash flow in the economy? I hope he has a full proof plan for this.

People in the crypto space are happy that he's a bitcoin enthusiast , that hopefully he'll make it a legal tender in Argentina. No doubt this will complete bitcoin adoption in that county, and if it works out well for their economy, other countries in similar situations can learn from them and also adopt bitcoin digital decentralized currency.

Since Milei wants to use the dollar as a replacement of the local currency of Argentina, in a way he will not be working without a central bank, as the FED will also become the central bank of Argentina in actual fact.

However this does not need to be a permanent change, it could make sense to make this move to stabilize the economy for a few years, and once things are back on track then a new central bank controlled by the Argentinian government could be created.

[bbc.reporter]

They are better off just using the US dollar or the Euro, and stay out of their own currencies. Many of their citizens stopped using their currency long ago as it was way too unstable.

This is a very headhshaking comment, I reckon. There are clearly are advantages and disadvantages, however, using the dollar will certainly be switching from being a monetary sovereign to something similar as an underling to the American government.

It might be better to fix their monetary problems internally and to not concede currency sovereignty because this would certainly place them under the fiscal instability of America.

[pooya87]

This is what happens when non-politicians become politicians! He is basically Zelenski 2.0 who is set out to ruin the country.

I agree that some of the decisions he has made has been rash, looking like they were made for the shock effect of wanting to change things at the snap of the finger rather than having a long term goal in mind, but politicians have been failing for years unend now.

I don't think we should highlight the non-politicians who entered into leadership positions as an argument against it, we have had a truckload of politicians running economies to the ground and there are non-politicians who have done well in their time in charge.

Someone who has spent a large portion of their lives in politics has the most important thing: experience. Even if a large number of existing politicians have been incompetent and have messed up, that still doesn't mean we should look outside and bring people in who have zero experience in politics and in leading a country!

It's like if developers of a project weren't coding well and the project had bugs, and to solve it we decide to kick them out and bring in people who have never written a single line of code in their lives!

The point is that there is a third option between choosing among the existing incompetent politicians and new inexperienced and volatile people. Unfortunately a lot of countries are choosing the later these days because these "celebrities" are proficient in gaining "followers" by advertising themselves.

[Liquid71]

I thought they were going to use the dollar, so excuse my ignorance but why would they need a central bank if they on the dollar. Not that I'm defending the dollar, I get the evils of the dollar and all fiat and central banks are slave owners. Just not sure what the central bank would do without a currency to manipulate. I'm sure I'm missing a lot, and would be so cool if they were going on Bitcoin standard. On Dollar standard not sure what central banks role would be, so not sure what this news means.

[Upgrade00]

Someone who has spent a large portion of their lives in politics has the most important thing: experience. Even if a large number of existing politicians have been incompetent and have messed up, that still doesn't mean we should look outside and bring people in who have zero experience in politics and in leading a country!

I beg to disagree here. If that experience has failed time and again even if all the factors to succeed were present then it simply means that, experience does not equate to results. It's also about the willingness and desire to do what's right and make the hard decisions.
Leaders do not lead in isolation, they have advisers, people handling different aspects of the nation and economy, if you can get the best hands on the job, with no political bias involved, you are more than likely to succeed as a leader.

It's like if developers of a project weren't coding well and the project had bugs, and to solve it we decide to kick them out and bring in people who have never written a single line of code in their lives!

Well it's a shame politics does not have a special training or requirements so it can't be likened to coding of any other skill jobs.

The point is that there is a third option between choosing among the existing incompetent politicians and new inexperienced and volatile people. Unfortunately a lot of countries are choosing the later these days because these "celebrities" are proficient in gaining "followers" by advertising themselves.

A lot do not even have a choice at all, but that's a whole different topic.

[bbc.reporter]

This is what happens when non-politicians become politicians! He is basically Zelenski 2.0 who is set out to ruin the country.

I agree that some of the decisions he has made has been rash, looking like they were made for the shock effect of wanting to change things at the snap of the finger rather than having a long term goal in mind, but politicians have been failing for years unend now.

I don't think we should highlight the non-politicians who entered into leadership positions as an argument against it, we have had a truckload of politicians running economies to the ground and there are non-politicians who have done well in their time in charge.

Someone who has spent a large portion of their lives in politics has the most important thing: experience. Even if a large number of existing politicians have been incompetent and have messed up, that still doesn't mean we should look outside and bring people in who have zero experience in politics and in leading a country!

It's like if developers of a project weren't coding well and the project had bugs, and to solve it we decide to kick them out and bring in people who have never written a single line of code in their lives!

The point is that there is a third option between choosing among the existing incompetent politicians and new inexperienced and volatile people. Unfortunately a lot of countries are choosing the later these days because these "celebrities" are proficient in gaining "followers" by advertising themselves.

I reckon Nayib Bukele can be placed in a category of inexperienced politician, however, he is doing good for his country. Is he not? It depends on the person sitting on the executive seat and while there are disadvantages on Javier Milei's decision to drop their currency and redollarize Argentina, we have not witnessed what he can really do for his country. We should wait before we make negative assumptions. I have learned this when I gave my own negative assumptions on Bukele. I have admitted this mistake already hehehe.

[pooya87]

Leaders do not lead in isolation, they have advisers, people handling different aspects of the nation and economy, if you can get the best hands on the job, with no political bias involved, you are more than likely to succeed as a leader.

That's true but then again experience comes in handy here too. One needs to have built connections and know "people" to be able to choose their advisors wisely and not end up with malicious behind the scene actors giving them malicious advice for personal gains.

I reckon Nayib Bukele can be placed in a category of inexperienced politician, however, he is doing good for his country. Is he not?

No, I wouldn't categorize Bukele as inexperienced. He has studied Law and became Mayor in 2012 and remained in politics until his election as president in 2019. That's at least 7 years of good experience in office with an important position (ie. mayor) doing actual work.

In comparison Milei studied economics and the only involvement he had in politics has been insulting others in interviews and creating controversies, and finally joining a right-wing political coalition (radicals) that led to his election. That is zero actual experience.

We should wait before we make negative assumptions.

I agree that only time would tell but right now we are only speculating based on the data we have.

[Upgrade00]

That's true but then again experience comes in handy here too. One needs to have built connections and know "people" to be able to choose their advisors wisely and not end up with malicious behind the scene actors giving them malicious advice for personal gains.

Experience does play a role, but not necessarily in politics. I don't need to be in politics to know someone who can effectively handle the health sector, or football sector etc. In the end it's all down to a blend of both sides of the coin.

If I had the option to choose between an experienced politician who has failed repeatedly in the past and an untested and inexperienced politician with promise, I will go with the latter option every single time.

[Kakmakr]

Well, it is obvious that their Central Bank are useless and that it is dragging down their economy, so it will be better to shut it down, before it leads to an inevitable collapse.

The problem is still the political decisions that are made.. that are contributing to their bad economy. They should also know that the World Bank will pull it's loans to the country, if they drop Fiat currencies, because that is the hold that they have over countries. 

[bbc.reporter]

Well, it is obvious that their Central Bank are useless and that it is dragging down their economy, so it will be better to shut it down, before it leads to an inevitable collapse.

The problem is still the political decisions that are made.. that are contributing to their bad economy. They should also know that the World Bank will pull it's loans to the country, if they drop Fiat currencies, because that is the hold that they have over countries.  

These are very simplistic statements for something very complicated but I understand what you are trying to imply. However, a country dropping their own currency and using another country's currency would be giving up being a monetary sovereign. If this country decides to use the American dollar, similar to El Salvador, then the country will become a servant of the government of America. They would presently need to borrow or acquire dollars to use and spend. They would also suffer dollar inflation and interest rates. This is contrary to before where the country was the issuer of their own currency.

[wallet4bitcoin]

The newly elected Argentina president Javier Milei have come to the air to announce his decision to shut down the Central Bank of Argentina as one of his new moves as the president of the country. He made mention of this yesterday on his official statement he released on the office’s X social media handle.

This sounds like the best news update I have heard in recent times, and to think that i just got to know that the newly elected president is a Bitcoin supporter still baffles me. He made no mistakes about his stance on the digital space as his actions are loud enough for the deaf to hear and the blind to see.

Shutting down the central bank of any nation is not a childs play, it has its pros and cons and i believe the president knows this very well. For him to have it shut down shows he has a better plan and I trust it to be geared towards the digital space.. Great move if you ask me

[pooya87]

We should wait before we make negative assumptions.

It is still too soon to pass the final verdict but after seeing this post on reddit I thought it is good to share it here as an update regarding the first signs of bad decisions that affect the economy in a severely bad way.

Argentina inflation shot up to 160% and at this rate if they actually try replacing Peso with Dollar at some point in the future, regular people won't be left with much in their pockets because of the low exchange rate.

This is the 5 year chart from google showing Peso exchange rate against USD with the unprecedented recent jump and it's not a good start:


P.S. After typing this a dangerous thought passed my mind. Is it possible that this crash is intentional? We've had similar decisions made elsewhere when the government or the central bank had been facing issues for a long time and wanted to make a change (dump their fiat, replace bank notes, etc.) and they dump the exchange rate like this intentionally. In all cases it crushed the economy and the middle class.

[Lucius]

Populists always say what the people want to hear, and does anyone really think that the central bank of Argentina is the main culprit for a decade of crazy policies that destroyed that same country that used to be in the top 10 countries in the world? Foreign interests always have two courses of action when it comes to the "subjugation" of countries, and the first is certainly the economic destruction of the country, and if that doesn't work, the second option is war.

Did you see where Milei went on his first visit and who are his role models? In addition, look at where he appointed the former governor of the central bank and his associates, and then he talks about some kind of savings in the state administration.

~snip~
This is what happens when non-politicians become politicians! He is basically Zelenski 2.0 who is set out to ruin the country.

I understand that you don't want to (or can't think differently), but we in Europe consider President Zelensky to be an extremely brave man who is doing everything to defend his country, and thus the rest of Central and Western Europe, from the creation of a new Russian world. Comparing someone with the nickname "El Loco" to a man who stood up to one of the greatest military powers is completely meaningless.

[pooya87]

I understand that you don't want to (or can't think differently), but we in Europe consider President Zelensky to be an extremely brave man who is doing everything to defend his country, and thus the rest of Central and Western Europe, from the creation of a new Russian world. Comparing someone with the nickname "El Loco" to a man who stood up to one of the greatest military powers is completely meaningless.

The problems with Zelenski is not what he is doing now (what else were he going to do? Give up after the invasion and not send the army forward from the safety of his bunker?!! lol)
The problem is all his naïve actions, statements, incitements and "pokes" that led to the conflict with the neighbor! Everything that could have been avoided if an actual politician were in office and for example instead of bringing Russia's enemy #1 to 400 km from Moscow could took both US and Russia by the balls and milk them both for the benefit of his country and ensure its security.

What do you think Erdogan in Turkey has been doing all these years? More so in the past 2 years...

I know that in Europe there is a dictated status quo but if you spend time studying history of what led to the conflict from sources other than the censored mainstream media you can see that when it comes to lack of experience and naïve and in some cases very suspicious behavior that is harmful to the country, both Milei and Zelenski are pretty similar.

[Emmanuelex]

I don't think closing their central bank is a good idea. Every country must have a currency that represents them. That's not to say Bitcoin is not good, but I feel bitcoin is meant to serve as an alternative currency.

As for their currency losing value, I don't think switching to Bitcoin would make their country rich, as long as they don't follow the right steps to fix their economy, they will continue to fail. So closing down a central bank is the least of their problem. It's not like he will be there forever, when his term is over, the next president can decide to change that.

[electronicash]

crazy Milei shutting down the only institution that holds them to be considered an independent country. but maybe this guy has been talking to Bukele as well like he could also declare BTC as legal tender in Argentina.

but most probably the central bank will be replaced with CBDC as reported they will be using USD. maybe stablecoin as well so they are getting ready to make BTC legal tender too and then go on with stablecoins. if only there were stablecoins for each country which can also be used by the rest of the world the better it would be to close central banks.