Argentina adopts economic shock therapy, doubles the value of the peso, and accepts Bitcoin contracts for signing

After Argentina’s new right-wing liberal president Javier Milei took office, he quickly implemented a series of radical economic reform measures. He announced that he would directly devalue the Argentine peso by more than doubling, freeze all public works projects, and cut government spending. These measures triggered popular dissatisfaction and protests. Before the election, Milei had supported the abolition of the Argentine peso and called for the "dollarization" of the economy. However, he appears to have changed this position and allowed the use of Bitcoin and other cryptocurrencies for contract signing. This move has aroused attention and discussion from all parties.

The Argentine peso has depreciated three times since the beginning of the year

Argentina is facing a serious inflation problem, and the inflation rate is expected to reach 147% by 2023. The Argentine peso has also depreciated very seriously. It has depreciated from 176 to the dollar at the beginning of the year to 366 to the dollar now, more than doubling its value. Argentina's Economy Minister Luis Caputo cut the official exchange rate directly to 800 in a recent televised speech. He said the central bank's goal is to depreciate by 2% per month. Caputo said the measures were backed by the International Monetary Fund (IMF) and, although painful in the short term, were intended to cut the country's fiscal deficit and reduce high triple-digit inflation.

Bitcoin and other cryptocurrencies can be used to sign contracts

Argentine Minister of Foreign Affairs and International Commerce Diana Modino confirmed on the X website: In Argentina, Bitcoin can be used to sign contracts.

She also pointed out that under Article 766, the debtor is obliged to pay the equivalent of a specified currency, whether fiat currency or other cryptocurrencies, or even physical goods such as kilograms of beef or liters of milk.

Modino did not reveal any specific details about new measures the government may plan related to cryptocurrency. However, he is consistent with the world’s largest cryptocurrency’s early endorsement and recently elected President Milei’s view on monetary policy that devaluation is inevitable as local currencies face hyperinflation and serious problems.

Milei announces radical economic shock therapy

The new right-wing liberal president Javier Milei firmly believes that privatization and free markets are the only way to save Argentina. In a recent nationally televised address, he unveiled details of a series of so-called "economic shock treatments." These measures include cutting government spending, converting state-owned enterprises into private enterprises, relaxing mining regulations, abolishing rent regulations, lifting export restrictions, and significantly devaluing the currency. He believes these measures will have a positive impact on the Argentine economy.

Although the new policy was recognized by the International Monetary Fund and is considered an important step in Argentina's restoration of stability and reconstruction of the country's economy, Argentina has experienced a wave of soaring prices across the country. For example, meat prices have increased by 40%, Shell Oil has increased fuel prices by 37%, and Aerolineas Argentinas has doubled ticket prices.

Its fierce policies have also triggered a backlash from the public. A large number of protesters demonstrated in the capital all night long. Only time will tell whether the new government's economic policies can bring a glimmer of hope to Argentina!

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