The dollarization was on the lips of all economists during the week. With no reserves and persistent inflation, the various exchange rates begin to correct for inflation. Within this framework, Javier Milei, the most widely read economist, referred to the feasibility of the plan proposed by the candidate for President.
emilio ocampo, is an economist from the University of Buenos Aires and a university professor with experience in large investment banks such as Citibank, Morgan Stanley among others. One of his latest publications is “Dollarization, a solution for Argentina” that he wrote together with Nicolás Cachanosky. In this framework, he gave a radio interview and explained his alternative to stop the crisis.
“Dollarization is like a pizza; I love pizza but I don’t like it with pineapple. Dollarization has a dough that is the dollar and then it has ingredients that depend on each country. The problem with speaking of dollarization as a generic term is that there are multiple variants“, began the interview in dialogue with Radio con vos.
“Dollarization has to do with what currency is used in the economy. There are two ways of looking at dollarization: one is the official one, the one that a government can decide, and the other is de facto; regardless of what the government says people use the dollar edolarn their transactions. A company that has to invest in the long term does so in dollars, the Argentine State has more than 50% of its debt in dollars, the departments are in dollars, people save in dollars. Argentina is not fully dollarized, it has a high degree of dollarization,” he developed.
Learn more – Follow the price of the blue, official, CCL and MEP dollar in Argentina
And he added: “There are several dollarized countries that went through the pandemic like Ecuador and yet the macroeconomic performance was not worse than that of Argentina. Argentina becomes less competitive with a policy of delaying the exchange rate like the one that has been carried out this government.”
In this context, he assured that “when an economy has a high degree of dollarization like Argentina, economic policy becomes very ineffective.”
At what price of the dollar could dollarization take place?
For the economist, “dollarization has costs and benefits, no one can claim that dollarization is the path to nirvana. If Milei were president and wanted to dollarize, he doesn’t have to do it at $2,000. He has to do it at a price close to the rate of free exchange, we don’t know what it is because there are eighteen different types of exchange”.
“Dollarization is done at the market exchange rate” and added: “The calculation that must be made is how many assets and how many liabilities the Central Bank has. This result is not fixed, it depends on economic policy. Dollarization is not magic, it is a solution for countries with extreme situations like Argentina that has not achieved monetary stability.”
Source: Ambito
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