The proposal of dollarization express by javier milei on repeated occasions it is one of the issues that marks the economic agenda. In that sense, carlos rodriguezeconomist and ideologue of the candidate for president of Freedom Advancesreferred to this initiative.
Carlos Rodríguez’s dollarization proposal
Through his official Twitter accountRodríguez detailed his analysis of the current state of affairs and marked what should be the Steps that you consider should be followed to effect dollarization.
To begin with, the economist described the importance of the US currency in the Argentine economy: “There is already a banking system that can operate in dollars. Today there are about 14 million dollar accounts, with an average of $91 per account. Deposits are about 15 billion dollars. Loans restricted to exporters are $3,000, cash is $1,000, and BCRA reserves are 11,000. , all approx”.
And he highlighted the restrictions despite which dollars do not stop circulating. “The operation of this system is very restrictedis complemented by the MEP and CCL on the Stock Market. There are many restrictions for dollars to circulate and be used in commercial operations, exchange control is the greatest difficulty. The dollar is widely used as numerary in large sectors of the economybut there are restrictions to carry out transactions in dollars”.
Secondly, Rodríguez points to the dollars that are out of circulation: “There are approx. 300 billion dollars in “mattresses” out of reach of the DGI that do not circulate”. It proposes that a “broad pardon be carried out on these holdings so that they are incorporated into the Argentine financial system. This will also require a deep, credible and sustainable fiscal adjustment that generates confidence that the abuses of the past will not be repeated”.
The third step detailed by Milei’s ideologue refers to the de-pesification instance. In the tweet, he explained that the Central Bank (BCRA) “has, at the current free exchange, about 35 billion dollars equivalent in pesos (PM Monetary Liabilities) that they should be rescued somehow“.
In this sense, he explained that there are different ways to rescue these monetary liabilities: “From their simple liquefaction through inflationas has already happened in the past, until its ransom with dollar bill that the BCRA should get to give in exchange for its liabilities. In between there are solutions like the Bonex plan of 1990 where a Bond in dollars is given in exchange, less liquid than dollar bills. There is also the alternative immediately redeem only the part of the pesos associated with the commercial line of the economy (M1), which today would be about 10 billion pesos in dollarsand finance the rest in one of the ways mentioned above.
Finally, he explained the objectives to which this measure would aim: “The idea should be that the swap does not harm economic activity. The topic it is complex and clearly depends on (1) the initial situation(2) political power(3) the fiscal adjustment and (4) the confidence that is generated.
In addition, he mentioned the improvements that would result from the implementation of the dollarization project that he is analyzing. “We would have a monetary system with dollar assets equal to the $15,000 already on depositthe fraction of the 300,000 that come out of mattresses and remain in the country, and the $35,000 to be rescued by the BCRA. I would be much more than we have now. And a enormous potential for genuine expansion of productive credit“.
Source: Ambito
