The refusal of the country from its own Central Bank

Cryptomultiplier

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Quote from: kryptqnick on May 02, 2024, 09:27:42 AM

Milei had some radical ideas, and some of them are being implemented. But as of May 2024, Argentina's Central Bank is still operating. The solution of dollarization and Central Bank abolition is still being discussed, but it wasn't implemented. It's not impossible to make it work, and it might be a good idea for Argentina, considering decades of poor financial policies, but it doesn't mean this decision is without risks. In the meantime, Milei restricted public spending and said that Argentina had a first budget surplus in more than a decade.

I can't help but think that instead of Milei to accept dollarization, why not opt to join BRICS countries and use the Yen?
It sure would have been a better idea, while good policies will be enacted to help the Argentine Central Bank play the right role in nation building and macroeconomics.
Had it been it could work out well for crypto currency development in the country, I would have seen it to be a better alternative or rather, pair, with the Argentine currency, so as to further lessen the burden on the central banks to perform.

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Quote from: kryptqnick on May 02, 2024, 09:27:42 AM

Milei had some radical ideas, and some of them are being implemented. But as of May 2024, Argentina's Central Bank is still operating. The solution of dollarization and Central Bank abolition is still being discussed, but it wasn't implemented. It's not impossible to make it work, and it might be a good idea for Argentina, considering decades of poor financial policies, but it doesn't mean this decision is without risks. In the meantime, Milei restricted public spending and said that Argentina had a first budget surplus in more than a decade.

When you listen to the manifesto of political leaders during campaigns you would believe that they are the solution to the country's problem. They will always tell you the problems of the current government and give some solutions that will amaze you. All these sweet words are political statements targeted at gaining political power. Another point is that some of them don't really understand governance, so they can easily come up with unworkable solutions. When they finally win elections they will discover from experience that their solutions or policies are not practical.

I think this is the case of Javier Gerardo Milei. He has realised that it would be an economic blunder to govern a nation without a central bank. Abolishing the Argentine central bank and relying on the Federal Reserve is simply subjecting his country to financial slavery. Argentina needs to make its monetary policies that will suit the local economic environment and not depend on a super economy like the US.

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Milei had some radical ideas, and some of them are being implemented. But as of May 2024, Argentina's Central Bank is still operating. The solution of dollarization and Central Bank abolition is still being discussed, but it wasn't implemented. It's not impossible to make it work, and it might be a good idea for Argentina, considering decades of poor financial policies, but it doesn't mean this decision is without risks. In the meantime, Milei restricted public spending and said that Argentina had a first budget surplus in more than a decade.

Argoo

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Quote from: Knight Hider on August 23, 2023, 09:22:24 AM

Quote from: zasad@ on August 23, 2023, 06:26:05 AM

More drastically, he also plans to shutter the central bank — which he said has “no reason to exist” — and dollarize the $640 billion economy.

“Central banks are divided in four categories: the bad ones, like the Federal Reserve; the very bad ones, like the ones in Latin America; the horribly bad ones; and the Central Bank of Argentina,” he said.""

The only thing worse than having your own central bank in charge of your money, is having someone else's central bank do the same.
IF you want to improve the money system, ditch fiat money. Instead, base it on something real. Like backed by gold. Or 95% gold and 5% Bitcoin.

--Knight Hider

The central bank in each state performs many useful functions, regulating the financial system and taking measures to strengthen its national currency. Paper money also plays a certain positive role. Therefore, there is no need to reinvent the wheel. If there is no central bank, someone will definitely perform its functions. And if it is just one official, then the problems in the country will certainly increase.

It will be best if the state has a strong national currency. And for this, first of all, it is necessary for the economy to work and all processes in it to be optimized. But don't blame paper money. In a normal state, they are issued for the amount of material assets in circulation and then problems should not arise.

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Quote from: Captain Corporate on August 23, 2023, 04:01:45 PM

This is not a good move, you do not want to leave the freedom of your nation at the hands of some other nation. USA is a totally different country and even though dollar is stronger than what they are using right now, that doesn't mean that it would be a good idea to leave that freedom aside. You should not use another nations currency just because yours is not doing fine. Ours is not doing fine too, Lira has been on the downfall for MANY years, it has been going down more and more and more every single year, it used to be under 5 just a few years ago, and now its over 27, and we are still using it and I would not change it for anything. Independence is more important than any trouble you may face financially, if you are not independent than being rich is worthless.

This is politics and people will keep doing things to attract the citizens to vote for them when they get to the seat, they will end up doing the contrary things they promised which is how politics works. I'd he think he can abish the Central bank so what bank will be available to regulate the country's currency? This is a big blunder and I don't know how he is going to achieve this if the central bank is no more available to pint and regulate the country's financial economy.

348Judah

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Quote from: zasad@ on August 23, 2023, 06:26:05 AM

And what's the problem? Are some countries willing to lose their financial independence and use someone else's currency?

Many things are involved here, what's the guarantee that he's going to win the election?

Secondly, how are we going to be sure that this is not just a political propaganda, he might have his real intentions unpredictable?

Thirdly, how sure are we that he's considering bitcoin when he's not mentioning that as his plan, is it possible to dedollarize the economy without having a planned alternative currency in place such as bitcoin in cryptocurrency?

Quote from: zasad@ on August 23, 2023, 06:26:05 AM

Of course, all central banks follow the recommendations of the IMF and BIS, but this is a very radical idea.

Who knows what may turns out as the outcome in this, he may be actually pushed to make this decision but knowing that even if he wins the election the plan is not going to work for himself as well, IMF and others may have more reasons to convince him base on what's at stake and that's if he wins the election.

Captain Corporate

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This is not a good move, you do not want to leave the freedom of your nation at the hands of some other nation. USA is a totally different country and even though dollar is stronger than what they are using right now, that doesn't mean that it would be a good idea to leave that freedom aside. You should not use another nations currency just because yours is not doing fine. Ours is not doing fine too, Lira has been on the downfall for MANY years, it has been going down more and more and more every single year, it used to be under 5 just a few years ago, and now its over 27, and we are still using it and I would not change it for anything. Independence is more important than any trouble you may face financially, if you are not independent than being rich is worthless.

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Quote from: zasad@ on August 23, 2023, 06:26:05 AM

https://finance.yahoo.com/news/argentina-milei-vows-pay-country-184053945.html?
"Argentina’s leading presidential candidate Javier Milei pledged to close the nation’s central bank while saying he would make every effort to avoid a default on the country’s sovereign debt if he wins the October vote.

More drastically, he also plans to shutter the central bank — which he said has “no reason to exist” — and dollarize the $640 billion economy.

“Central banks are divided in four categories: the bad ones, like the Federal Reserve; the very bad ones, like the ones in Latin America; the horribly bad ones; and the Central Bank of Argentina,” he said.""

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And what's the problem? Are some countries willing to lose their financial independence and use someone else's currency?
Of course, all central banks follow the recommendations of the IMF and BIS, but this is a very radical idea.

In reality most governments understand that a strong and independent central bank is a positive thing for their country. Argentina has literally faced many decades of poor governance from politicians, that doomed it's economy and thus prevented the central bank from doing their job effectively because they were always fire fighting. They might as well do it now, since the government has crippled the monetary situation in the country and it basically works off a black market US dollar economy anyway, however instead of it being a bold and strong act, they are really just accepting that they are so poor at handling money that they pass over the responsibility to America instead, completely weak.

panganib999

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Quote from: zasad@ on August 23, 2023, 06:26:05 AM

https://finance.yahoo.com/news/argentina-milei-vows-pay-country-184053945.html?
"Argentina’s leading presidential candidate Javier Milei pledged to close the nation’s central bank while saying he would make every effort to avoid a default on the country’s sovereign debt if he wins the October vote.

More drastically, he also plans to shutter the central bank — which he said has “no reason to exist” — and dollarize the $640 billion economy.

“Central banks are divided in four categories: the bad ones, like the Federal Reserve; the very bad ones, like the ones in Latin America; the horribly bad ones; and the Central Bank of Argentina,” he said.""

___

And what's the problem? Are some countries willing to lose their financial independence and use someone else's currency?
Of course, all central banks follow the recommendations of the IMF and BIS, but this is a very radical idea.

Between the massive calamity they tanked and tensions between neighboring countries as well as an economy that's not getting any better. To some countries like Argentina taking up another currency like the dollar would be the most sensible move they can make if they don't want the people to die of starvation. It's not about principles and shit at this point, it's mostly all about ensuring the proper survival of your economy. Although I don't really think the closing of its central bank is the "best move" as they can easily just sell their exports and all that at half the price or something, but I don't know man Argentina's case is a pretty tricky one in my opinion. They're not 6 feet deep in the grave just yet for them to make decisions as massive as this, but if they don't do something massive they could very well be in the future.

Gyfts

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A country in debt would not close its central bank, even when the debt is in foreign currency. Obviously if the debt is within its own currency, then the incentive to keep printing money to pay off the debt exists. But the central banks have pegged economic growth to their interest rates and there is simply no way out the system without a huge initial crash in economic activity. That's not to say the economy wouldn't recover and be better off -- though a politician wouldn't be amenable to taking the political ramifications for such a crash.

The interest rates in Argentina are abysmal. They've been battling inflation and have since been trying to balance their GDP and inflation rate. They'd be better off if the central banks were done away with.

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Quote from: zasad@ on August 23, 2023, 06:26:05 AM

https://finance.yahoo.com/news/argentina-milei-vows-pay-country-184053945.html?
"Argentina’s leading presidential candidate Javier Milei pledged to close the nation’s central bank while saying he would make every effort to avoid a default on the country’s sovereign debt if he wins the October vote.

More drastically, he also plans to shutter the central bank — which he said has “no reason to exist” — and dollarize the $640 billion economy.

“Central banks are divided in four categories: the bad ones, like the Federal Reserve; the very bad ones, like the ones in Latin America; the horribly bad ones; and the Central Bank of Argentina,” he said.""

___

And what's the problem? Are some countries willing to lose their financial independence and use someone else's currency?
Of course, all central banks follow the recommendations of the IMF and BIS, but this is a very radical idea.

More promises from politicians. Does anyone else believe in this? Before the elections, each candidate promises to move mountains, and after - as usual they become so invisible.

Promises to make efforts to avoid default? Will Javier Milei be up to this task? The problem is serious and cannot be solved by words alone.

If Argentina closes the central bank, will it be the first country in the world without a central bank? It will be funny to look at the consequences of this, it will be a spectacle. A unique precedent is being planned, but I would not want such experiments to be carried out in my country, because no one knows what will happen to the economy. It could get even worse.

In fact, it is difficult to talk about the economic freedom of countries when all world trade is conducted in dollars (reserve currency) and in fact, local currencies are the same recolored dollars. So, the presence of the national currency (peso) does not mean financial independence for Argentina.

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Quote from: zasad@ on August 23, 2023, 06:26:05 AM

"Argentina’s leading presidential candidate Javier Milei pledged to close the nation’s central bank while saying he would make every effort to avoid a default on the country’s sovereign debt if he wins the October vote.

More drastically, he also plans to shutter the central bank — which he said has “no reason to exist” — and dollarize the $640 billion economy.

There are many politicians who promise beyond their capacity to deliver. The question is what steps will he take when he intends to close all existing central banks when he is elected president? Indeed there are many people now starting to doubt the real benefits of a central bank, but realistically (in general) there is still enough need for a central bank at this time important. The inclination of people toward central banks can be seen from how large a percentage of people are still using these services and whether the country is losing interest in existing central banks.

He must offer a solution to the failure of several central banks to operate, both in terms of serving the people and the interests of the country itself, not promising otherwise but never having the courage to take a step like that of El Salvador's president Nayib Bukele

Quote from: zasad@ on August 23, 2023, 06:26:05 AM

And what's the problem? Are some countries willing to lose their financial independence and use someone else's currency?
Of course, all central banks follow the recommendations of the IMF and BIS, but this is a very radical idea.

The state has guaranteed through regulations that each country has its own currency and if they want to use another country's currency in their country, it means that the country is not doing well. This idea will actually make his voice eroded and in the end he will lose the presidential election battle.

sunsilk

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With high inflation in that country, that candidate probably thinking that it can be saved through relying on another currency and that's going to be the USD.

There are countries that have already relied on USD despite that they're an independent nation and now, using USD as their legal tender.

Maybe it will work, maybe it will not. Well, for the voters out there, make sure that you read the background of your next president. I don't know him but in terms of this based on google, he's an economist.

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Quote from: zasad@ on August 23, 2023, 06:26:05 AM

And what's the problem? Are some countries willing to lose their financial independence and use someone else's currency?
Of course, all central banks follow the recommendations of the IMF and BIS, but this is a very radical idea.

I'm sure the central bank did something that even the country would not take for granted, well fortunately the central bank does not have power over state power, at least it will eliminate the bad things because of greed from what the central bank wants. I think this also proves the goodness of what kind of decentralized technology there is in crypto, they never seem to make problems for any country, it's just that the fluctuation is very high.

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Quote from: Lucius on August 23, 2023, 09:01:31 AM

I am of the opinion that every country should have its own national currency, but it is also a fact that there are very few countries in the world that understand what it actually means to have a state.

Adopting the dollar as the currency of Argentina is not a bad idea because it will help stabilize the economy that has a history of currency fluctuation and high inflation. But I also think that nations should have their own currency and not depend on other strong currencies. The US will make monetary policies to suit its economic condition and it might negatively affect Argentina. Argentina has it's peculiar economic challenges and policies should be made within the country to curb it.

Quote

That guy from Argentina seems to me like some kind of anarchist who doesn't need a central bank, but would be happy to transfer the problem to the FED and foreign currency, which is not something that characterizes a good politician.

He is an overzealous politician who will later realize that most of his proposed policies are not realizable. Maybe all this overzealousness is to get votes, especially from the youth in the next elections.

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Quote from: Knight Hider on August 23, 2023, 09:22:24 AM

Quote from: zasad@ on August 23, 2023, 06:26:05 AM

More drastically, he also plans to shutter the central bank — which he said has “no reason to exist” — and dollarize the $640 billion economy.

“Central banks are divided in four categories: the bad ones, like the Federal Reserve; the very bad ones, like the ones in Latin America; the horribly bad ones; and the Central Bank of Argentina,” he said.""

The only thing worse than having your own central bank in charge of your money, is having someone else's central bank do the same.
IF you want to improve the money system, ditch fiat money. Instead, base it on something real. Like backed by gold. Or 95% gold and 5% Bitcoin.

--Knight Hider

It is obvious that the banking system in Argentina will continue to exist and perform its functions. In this case, some body is needed to manage the banking system and make quick and correct decisions in this industry, providing a unified approach to solving constantly arising financial problems.

Presidential candidate Miley plans to hand over the keys to the central bank to economist Emilio Ocampo, his unofficial adviser on the dollarization program, so he can shut it down. That is, in fact, the functions of the country's central bank will be performed by an unofficial adviser to the president. What does it change? Instead of a certain independence, the banking system will be under the strict control of one person. How good this person will be in managing banks, time will tell. The stability of the national currency, in this case the Argentine peso, largely depends on the stability of the banking system, which will continue to exist in any case. At best, it's like reinventing the wheel.

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Quote from: zasad@ on August 23, 2023, 06:26:05 AM

And what's the problem? Are some countries willing to lose their financial independence and use someone else's currency?
Of course, all central banks follow the recommendations of the IMF and BIS, but this is a very radical idea.

Argentine Peso (ARS) has gone through crazy economic crisis and a high inflation rate which is why shops there accept USD as payments more than the fiat issued by their central bank which clearly shows that people don't trust their banking system and this candidate is clearly trying to take this as an advantage to win.

Dollarization may solve the financial instability in their nation for the short term but what they are willing to compromise is losing control over monetary policy which is really a bad thing for the future of their nation as I said the political leaders don't care about the long term benefits they just want to win and settle the things for the short term so this idea is like putting a band-aid for a severe injury.

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This is almost the same with inflating the currency which devalues the currency and so is the debt. Debt will just disappear when the currency also has a lesser value. It's no wonder it's the first option to do when a country's economy is in trouble. They inflate the currency til the value of the 1 Trillion is equivalent to a loaf of bread.

Shuttering the Central Bank is quite different but may just have the same effect. It's just like deleting the currency and puff they are all poor. Adopt other currencies.

avikz

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Lol! In the world of economics, such kind of experiments may bring in disaster. Demonetize a multi billion dollar economy is not an easy task and a whimsical leader should not be trusted with such a huge responsibility.

Most probably this candidate is a puppet of America and America is funding his election expenses. Because such moves will surely boost the dollar dominance in the world map and make it costlier. I don't think any leader with sane mind will take such steps.

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So, he recognizes the fact that Central banks are generally bad/evil but chooses the lesser evil which regulates the US dollar. Clearly, the lesser cannot be a real solution the country's economic problem but just to help make the decay abit slower.
I think that should give the country the opportunity to fix its own issue and make it good rather than an outright abandonment for a lesser evil.

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