A congressman of Juntos por el Cambio (Together for Change) proposes that ARS 100 become equivalent to ARS 1. Argentine citizens buy Bitcoin and stablecoins to face uncontrollable devaluation and inflation of their national fiat currency.
The high inflation and devaluation of the Argentine fiat currency led national congressman Gerardo Milman of Juntos por el Cambio to introduce a bill. He proposed to remove two zeros from the peso a week after a debate that caused the design of new banknotes.
Article 1 of the bill establishes that the Central Bank of the Argentine Republic (BCRA) will issue banknotes and coins. Under Decree No. 2128/1991, the current Argentine peso will be worth one (1) cent.
If Congress approved that bill, 100 units of the current peso would become equivalent to 1 peso (ARS 1). That measure would prove the constant devaluation of the Argentine monetary system and the uncontrollable inflation.
In 1999, economist Aldo Abraham said that removing zeros from a local currency is neither a gain nor a loss. He thought it indicated that a country was doing something wrong, which led it to lose its purchasing power.
The Venezuelan government took a similar initiative in mid-2021 when it removed six zeros from the bolivar. That highlights an economic decline in which cryptocurrencies like Bitcoin (BTC) emerge as a hedge against inflation and devaluation.
For that reason, Argentina and Venezuela are the two Latin American countries with the highest adoption of Bitcoin (BTC) and stablecoins. Daniel Vogel, the CEO of the Bitso exchange, explained that Argentines turn to cryptocurrencies amid the unfavorable economic situation and restrictions on buying US dollars.
The executive said that citizens adopt Bitcoin and stablecoins massively due to the need to store value in the long term. He considers that economic difficulties that people go through make them see turning to cryptocurrencies as a sensible decision.
The US Dollar Has Risen from ARS 1 to ARS 206.5 in Twenty Years
In 2022, the peso has devalued by over 35.52%, compared to the blue dollar, which is trading at ARS 206.5. That figure shows the collapse of the fiat currency from the 1:1 parity it had maintained with the US dollar until early 2002.
Gerardo Milman stated that the government changed the images on the Argentine peso without advancing the issuance of higher denomination banknotes. People can buy fewer things every day, which led the congressman to propose a bill to remove two zeros from the fiat currency.
However, the plans by the government regarding the currency are distant from the bill proposed by Milman. President Alberto Fernández recently announced that they would replace the animals on the banknotes with heroes like Eva Perón and José de San Martín.
The head of state avoided mentioning the word inflation and the low value of the peso. Miguel Pesce, the director of the Central Bank, clarified that they have no intention of creating larger banknotes, as they encourage digitizing the payment system.
Pesce said the government does not consider it necessary to issue a higher denomination banknote. However, creating larger bills will be inevitable at some point if the devaluation of the Argentine fiat currency and inflation progress.
By Alexander Salazar
