Argentinian politics caught headlines around the world this weekend with the election of Javier Milei as the country’s new President – a man with a diverse range of viewpoints and planned policies.
Milei has been described variously in international media as a ‘far right libertarian’ who is pro-gun, anti-abortion and vows to cut ties with China. Meanwhile, his economic and fiscal policies could have a huge impact on the Latin American payments sector.
The politician is a listed on the World Economic Forum, a body which has been vocal in its support for greater regulation of cryptocurrencies. On this topic, one of Milei’s defining financial positions is that he is very supportive of Bitcoin.
The short term aftermath of his victory – which saw Milei seize leadership with an impressive 55% of the national vote, with a turnout of 77% – has seen the price of Bitcoin climb 3%, showing the continuing impact political developments can have on the stability of the world’s most widely used cryptocurrency.
So far, Milei’s main stance on Bitcoin has been that monetary control of the digital currency should be handed over to the private sector, and not to the Argentina state or its Central Bank – the latter of which he also has very disparaging views on.
Although he has not yet fully supported the adoption of Bitcoin as legal tender in Argentina, his vocal support for the currency could suggest such a policy in the future. This would further accelerate wider adoption of cryptocurrencies in the Latin American region at large.
A trend which has emerged in recent years has seen the popularity of crypto across the Spanish-speaking regions of both North and South America surge.
Perhaps the most notable example is when El Salvador became the world’s first state to make Bitcoin a legal tender, and purchased $85.5bn on the currency between September 2021 and January 2022.
Milei’s admiration for Bitcoin is strongly linked to one of his other defining economic policies, his aforementioned dislike for the Central Bank of Argentina, which would likely be one of the key targets of his planned rollback of the Argentina state.
Summing up his views on both the bank and Bitcoin, Milei said earlier this year that “we have to understand that the central bank is a scam”. On the latter, he added: “What Bitcoin represents is the return of money to its original creator, the private sector.”
The third and final financial policy of the new President which could significantly alter Argentina – and by extension, the Latin American and perhaps even North American payment landscapes – is his belief that the country should drop the Argentine peso and adopt the US dollar as its main currency.
As with Bitcoin, Milei’s victory has also had an impact on the already struggling peso’s value, declining 8% between 17 November and 19 November. Meanwhile, the stance could also significantly derail plans reportedly discussed earlier this year between Argentina and Brazil for a euro-style common currency.
With Milei’s presidency only in its infancy, his financial policies are clearly already having an impact on the cross-border finance, fintech and payments sectors, and this can be expected to continue.
In his victory speech on Friday, he declared: “Today is the beginning of the end of Argentina’s decadence. We’ll start doing things that history has shown work, and within 35 years, we’ll return to being a world power.”