President Javier Milei reaffirmed his support for the free coin competition such as crypto bitcoin, WTI and BTU. He spoke in favor of an open and flexible economy where various forms of currency can coexist.
The reference he made to the “functional currency” It would indicate a pragmatic adoption of modern accounting tools that allow different monetary units to be managed, according to the specific needs of each business or individual.
Javier Milei moves towards free currency competition
“There will be free competition of currencies, so if you want to use Bitcoin there will be no problems. And you can also use other units such as WTI, BTU and the one that will be most appropriate for your business. What’s more, accounting is resolved by the method of functional currency”, Milei said in a post this week.
Thus, the cryptocurrencies They are also part of the monetary roadmap designed by the president.
In addition, the currency competition scheme began to officially appear in conversations between the Government and the Monetary Fund.
To these definitions of the president, a report from the consulting firm was added, Bull Market, whose owner is Ramiro Marra, one of the president’s main advisors.
He provided details about what the Government’s plan would be like to advance currency competition and confirmed that Milei is looking for fresh dollars to try to open the exchange rate.
Dollarization: how many IMF dollars does Javier Milei need
Regarding the IMF, he also highlights that it would contribute between 5,000 and 7,000 million dollars in a new agreement. Other sources put that sum at $10 billion.
Official sources estimate that the Government will have between 15 and 18 billion dollars to advance the currency competition. There is even talk of a trip to the United States and Europe by the Secretary of Finance, Pablo Quirno, in order to delve into the fine print of a syndicated loan with guarantees from multilaterals or member countries of the G-7.
Did Milei speak about the issue in his recent meeting with G7 presidents? It is estimated that at least there were exchanges about this with the Italian Prime Minister, Georgia Meloni, with whom the relationship is optimal.
The presence of the Argentine president at the G7 was part of a strategy aimed at obtaining definitive support for a new agreement with the IMF until 2030, according to international analysts.
Some even risk the expression “mini Brady”, by which countries act as guarantors for funding and thus reduce the cost of financing lines. The report from Marra’s consulting firm speaks directly of a “mini Brady Plan.” That initiative was a debt restructuring process of developing countries with commercial banks that was carried out in the early 1990s in nations such as Argentina, Ecuador and Mexico.
Marra’s consultant ventures more details: speaks of disbursements equivalent to between 125-130% of the Monetary Basewhich will be used to support the BCRA, strengthen its Balance Sheet and begin the Currency Competition process.
When it comes to detailing what the coin competition will be like, Marra’s consultant details that:
- Argentina does not need multilateral dollars to finance current spending nor refinance debt. The objective of these financing lines will be to support currency competition and help in the Endogenous Dollarization process.
- Argentina will obtain SDRs from G-7 member countries, a certain amount of guarantees from the World Bank (for example 1.5 billion dollars) and funding from the IMF. With that amount, the BCRA will have support for a syndicated loan with international, American and European banks. , in exchange for Argentine Law Bonds, for example 1.5 xu$s1 bonds, to begin the dollarization of the Monetary Base of 13.5 billion dollars (see how Milei Will Dollarize with Currency Competition). This funding does not imply full use, but it does imply fundamental support to stabilize the exchange rate while Argentines exchange Monetary Circulant for Dollars.
- The total amount of support to the BCRA will be between 15-18 billion dollars, at a rate of 125% of the Monetary Base.
