• Javier Milei, a prominent contender in Argentina’s presidential race, plans to shut down the central bank and prevent a sovereign debt default if elected.
•  His victory in the primary caused asset sell-offs, and Bitcoin hit a record high amid the peso’s decline.

Argentina’s prominent presidential contender, Javier Milei, has vowed to shutter the nation’s central bank and ensure a sovereign debt default is averted if he triumphs in the October election. Milei, an unconventional libertarian whose unexpected victory in the recent primary election stirred market turbulence, conveyed to Bloomberg News that his audacious fiscal recalibration would elevate Argentina’s global standing and creditworthiness, thus negating the need for default.

His strategy entails substantial spending reduction, equivalent to at least 13% of the gross domestic product, before mid-2025. This would involve drastic streamlining of public projects, a decrease in ministries, elimination of subsidies, and the removal of capital constraints, thereby enabling businesses to engage in USD transactions.

In a more radical move, he also intends to close down the central bank, asserting that it lacks a valid purpose, and adopt the US dollar as the currency for the $640 billion economy.  Milei said, “I will make every effort to avoid a default. If you do the fiscal adjustment that’s needed, the financing will be there.”

Following Milei’s unexpected victory in the primary election, which few investors previously regarded as a significant contender, Argentina’s assets experienced a sell-off. The primary is a gauge for presidential elections in a nation where polling is unreliable. As markets opened on Monday, the resulting decline compelled the government to devalue its tightly regulated official exchange rate by 18%.

In his inaugural interview with international media following his unanticipated triumph, Milei outlined his strategy to replace the Argentine peso with the US dollar to combat the soaring 113% inflation rate. Furthermore, he escalated his critique of the central bank, labeling it “the worst garbage that exists on this Earth.”

Central Bank Closure Under Potential Milei Presidency

Should Milei secure the presidency, he intends to entrust economist Emilio Ocampo, who informally advises him on the dollarization initiative, with the responsibility of overseeing the closure of the central bank. Ocampo will also play a role in discussions with the International Monetary Fund (IMF), which has a $44 billion arrangement with the South American country. The candidate affirms that he has no intentions of requesting additional funds from the IMF.

“A fiscal deficit is immoral,” Milei stated. “If you live continually with a fiscal deficit, you’re going to be insolvent.” Milei has already formulated a blueprint for the economic transition to dollarization, pledging that this would be a priority if he emerges victorious in the October 22 election. Argentina’s approach would mirror El Salvador’s, offering individuals the option to opt for their preferred currency. According to his plan, the economy would achieve complete dollarization upon the conversion of two-thirds of the monetary base.

Argentina Witnesses Record-Breaking Bitcoin Surge After Astonishing Victory by Javier Milei

In the wake of an unexpected victory by a crypto-friendly libertarian candidate in Argentina’s presidential primaries on Sunday, Bitcoin has reached its highest value ever. Conversely, assets experienced depreciation, and the Argentine peso (ARS) declined as anti-establishment figure Javier Milei secured a leading position in the nation’s election, unsettling investors.

However, Bitcoin has remained stable and, propelled by the weakening peso, reached an unprecedented peak of 10.2 million ARS recently, as reported by CoinGecko. It has since experienced a slight decline to 10.1 million ARS.

This historical local high occurs amidst a period when the nation grapples with one of the globe’s most elevated inflation rates, and the peso is swiftly depreciating.

Digital currencies enjoy popularity within the country, as indicated by Chainalysis, which ranked Argentina as the tenth most significant hub for cryptocurrency adoption worldwide last year.

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