Besides price stability, one of the most difficult things to achieve in the world of cryptocurrencies and bitcoin is consensus.
To that end, recent headlines out of Argentina underscore some of the more existential debates surrounding cryptos’ place in investing but also in monetary policy.
Various news report that Argentina President Alberto Fernandez — interviewed by Argentine media outlet Caja Negra — said late last week that in examining whether CBDCs would be embraced, or if bitcoin would be a form of legal tender, said “I don’t want to go too far out on a limb […] but there is no reason to say ‘no’… They say the advantage is that the inflationary effect is largely nullified.”
But separately, also last week, governor of that country’s central bank, Miguel Pesce, said bitcoin is not a financial asset and said the central bank will “regulate the intersection of Bitcoin with the payment system and exchange market.”
Here, then, lies a key point of debate and of friction — whether and when or how bitcoin should be used as a means of payment, especially in economies that are marked by high levels of cash usage and by inflation.
Argentina’s inflation rate hovers around 50 percent. The idea of taking on bitcoin as a hedge against inflation comes in part because there is a finite amount of it that can be created — 21 million of them, to be exact. There’s some level of value — it remains to be seen where that level is — tied to scarcity value (volatility is still the name of the game for bitcoin and other cryptos).
The fact that bitcoin also exists “apart” from the central bank system also may prove attractive when viewed against the uncertainty of economies that grapple with inflation, with less-than-stable governments.
Past offers some prologue here. Earlier in the year, El Salvador announced plans to make bitcoin legal tender alongside the U.S. dollar.
In addition, many of these countries — Argentina among them — are still working to digitize their payments functions.
Pesce, of the central bank, is quoted elsewhere as dismissing the emergence of a central bank digital currency (CBDC), saying, “reserve the role of regulator for the Central Bank and that it is the private ones who disseminate the system and develop the technological platforms so that the transactions are carried out. ” In effect, Pesce seems to be saying that at present at least there will not be an intra-governmental effort to launch a central bank-led currency, as we’ve seen in other countries that are in pilot phase or deployment, ranging from Jamaica, to China, to the U.S., of course.
Argentina said earlier this year that it had begun the rollout of a nation-wide digital payments system known as Transferencias 3.0, which harnesses QR codes. It may be the case that central bankers view accepting bitcoin in commercial/retail/general payments setting would muddy the waters; a CBDC launch would detract from current digitalization efforts.
In Argentina, at least, the president and the central banker seem to have divergent opinions on cryptos’ (and a CBDC’s) place in the world — signaling that no clear roadmap is in hand.