On October 22, Argentina will go to the polls to decide its next president. Sergio Massa, Minister of the Economy and the presidential candidate representing the Union for the Homeland (Unión por la Patria), has pledged to launch a central bank digital currency (CBDC).
The country has been plagued by bouts of hyperinflation for decades, and monetary pledges have become a central issue of election campaigns. Massa’s main opponent, Javier Milei of the Libertarian Party (Partido Libertario), offers a radically different approach – he plans to scrap the central bank and dollarize the economy.
Should Massa win the election, the time frame for a CBDC is unclear. So far Argentina is only in the CBDC research phase. Until the election campaigns, politicians have been relatively quiet on the topic. However, Brazil (South America’s largest economy) has been running CBDC pilot tests with 16 commercial banks since early March. Should the trials prove successful, this could set a precedent for the rest of the continent.
In the BRICS August summit the group invited Argentina to become a full member by 2024 (as well as to Egypt, Ethiopia, Iran, Saudi Arabia and the UAE). The group has made calls to circumvent dollars for international transactions by using local currencies. And on August 14, India made its first crude oil transaction with the UAE using rupees instead of dollars.
Argentina’s membership of BRICS hinges upon the results of the election, and it is unlikely to go ahead if Javier Milei wins power, given he favors the dollar. However, Argentina has also begun to sidestep dollar payments itself, purchasing Chinese imports in Yuan since April this year.