Can Crypto Reduce USD Domination in Argentina?

Wilfred Michael 

Wilfred Michael

News reporter

30 March 2019,
15:04
Can Crypto Reduce USD Domination in Argentina?

In recent times, it has become a regular sight in foreign exchange to see the Argentine Peso lose value against the dollar. Sometime in Q3 2018, CNBC reported that the local currency had fallen more than 51% against the USD and since then, things haven’t gotten better.

On the year-on-year charts, the Argentine Peso is still more than 50% down against the USD, a situation that made most citizens turn to convert their fiat holdings to cryptocurrencies in the past year.

Although some may argue that the crypto market has suffered a steep decline within the same period, it would be a fair argument to say that a new invention should be competing in any way against a currency backed by a central government.

That situation brings us to comments reportedly made by Argentina’s Deputy Finance Minister, Felix Martin Soto, regarding how the use of cryptocurrencies could release the dominance of USD in the country.

In a press release, Soto remarked that one of the principal reasons why the Argentine Peso keeps losing against the dollar is that half of the country’s population do not have bank accounts.

Instead, they convert their savings into USD and use it for transactions likely both within and outside the country, which increases the country’s demand for the USD, thus reducing the fiat value even further.

In the Deputy Minister’s opinion, encouraging citizens to adopt cryptocurrencies as a payment option will go a long way to reduce the demand for USD in Argentina. That will, in turn, bring some stability to the country’s economy and once again position it as an investment-worthy region for global investors.

To what extent Argentina will move their crypto course in the coming months is a question that only time will answer. However, the Deputy Minister has made a statement that has potential benefits for both the cryptocurrency industry and Argentina.

He even hinted about partnering with crypto giants Huobi to tokenize some of the country’s agricultural and mineral resources as another way to attract foreign investors. Right now, we’ll fold our hands and watch how that unfolds even though it is already looking as though Argentina and Crypto were a match made in heaven.

 

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