Milley’s road map for dollarizing Argentina.. Is it the end of the peso? | Economy

Argentine President Javier Milli revealed a detailed road map for the country’s transition towards dollarization, during his speech at a trade event in the capital, Buenos Aires.

Bloomberg quoted President Milley as saying that the move towards allowing the dollar to become a legal tender alongside the Argentine peso will begin once the central bank’s balance sheet is cleared and the financial system is reformed.

Milley explained that this approach would ensure free competition between currencies, as the peso operates under a “flexible” exchange rate. Later, the central bank will stop printing the peso, paving the way for the dollar to become a dominant currency, according to the agency. Milley expects the peso to be phased out, likening it to a “museum piece.”

Since taking office on December 10, Milley has vigorously pursued an economic reform program, focusing primarily on reducing inflation, which has exceeded three figures in the country.

His administration – according to Bloomberg – reduced borrowing rates six times, removing them to 40% from 133% at the beginning of his term.

Challenges

In his speech at the trade event, Milley acknowledged the complexity of a full shift to the dollar, stressing that the timing of lifting capital controls will depend on the market.

According to the agency, Milley’s economic team, led by Minister Luis Caputo, is actively working to convert central bank debt into more attractive treasury bonds.

This strategy aims to ease the monetary authority’s increasing liabilities, allowing for more prudent financial management and eventually removing capital controls.

Bloomberg quoted Minister Caputo, in his speech at the same event, as explaining that the immediate removal of capital controls was “inappropriate,” indicating a cautious approach to ensuring stability during this transition period.