In a recent development, Argentine President Javier Milei has expressed his willingness to allow provinces in the country to pursue the creation of their currencies. This announcement follows a public exchange between President Milei and the governor of La Rioja province, Ricardo Quintela.
Argentine President backs provinces to make their currencies
Argentine President Milei, during an interview with Radio Mitre on January 14, confirmed that he would not oppose the legal aspects of provinces introducing their currencies. However, he emphasized that the market would ultimately determine the value of these projects. Despite this open-minded stance, President Milei cautioned against the potential negative consequences of what he referred to as “quasi-currencies.” According to Milei, the introduction of such local currencies could lead to increased inflation, and individuals receiving payments in these quasi-currencies might face financial losses.
He warned that those accepting such forms of payment from what he described as “irresponsible governors” could experience a reduction in their income. President Milei stated, “What is not taken from them through budgetary adjustment will be taken from them via inflation in the quasi-currency.” Governor Ricardo Quintela of La Rioja has been a proponent of creating a separate currency for the province in response to actions taken by President Milei. The president devalued the Argentine peso by 50% after taking office on December 10, 2023, aiming to address soaring inflation levels, which have reached their highest point in 32 years.
In addition to the devaluation, President Milei also reduced the funds allocated from the federal budget to provinces. Governor Quintela, framing these measures as “the abandonment by the nation,” has underscored the need to pay salaries to essential workers like policemen. In light of this, he has requested La Rioja’s legislature to prepare the legal groundwork for minting a local currency. This move echoes the sentiments of Axel Kicillof, the governor of Buenos Aires province, who also publicly contemplated the possibility of introducing a local currency in December 2023.
Bitcoin and its increasing popularity in Argentina
Notably, beyond the realm of official currencies, there are instances of alternative forms of payment gaining traction in Argentina. In the city of Rosario, the country’s third most populated city, a unique agreement has been reached between a local landlord and tenant. They have agreed to conduct the rental transaction using Bitcoin, marking the first such contract of its kind in Argentina. This development has been made possible by recent legal amendments enacted by the new presidential administration. The dynamics between President Milei and provincial governors reflect the broader economic challenges facing Argentina.
The devaluation of the national currency and reductions in federal budget allocations have led to local authorities exploring unconventional solutions to address financial concerns. The willingness to experiment with local currencies indicates a desire for greater autonomy in managing economic affairs at the regional level. While President Milei’s stance of allowing provinces to pursue their currencies showcases a commitment to decentralization, the cautionary notes about potential inflationary consequences highlight the complexities involved.
The delicate balance between local autonomy and the stability of the national economy remains a central consideration in these discussions. The emergence of alternative payment methods, such as Bitcoin transactions for rent in Rosario, adds another layer to the evolving financial landscape in Argentina. The adaptability to new forms of currency reflects a broader trend of exploring innovative solutions amid economic challenges. As Argentina navigates this economic landscape, the interactions between federal and provincial authorities, as well as the response of the public to evolving financial practices, will shape the future direction of economic policies and currency dynamics in the country.
