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Argentinian finance minister Alfonso Prat-Gay has announced that currency controls (so-called “cepo” in Spanish) are lifted from now on. It means that Argentinians will be able to buy dollars freely and up to 2 million per month as opposed to 2,000 until now.

The announcement came on 16 December after four years of state-regulated rates. As a consequence, currently the peso sees great depreciation. According to the Finance Minister Prat-Gay “ending the currency controls is the starting point for getting the economy back on its feet.”

While previous controlled price of the peso was of 9.8 for a dollar, economists expected it to reach between 14 and 15 per dollar after currency controls are no longer imposed. And indeed, after Prat-Gay’s announcement markets opened at 15 pesos per dollar, which were later lowered to 13.95 with intervention of Argentina’s Central Bank. Thus, the peso faced a devaluation of 30%.

Lifting the currency controls is only one of many decisive economic measures taken by the new Argentinian government led by Mauricio Macri. As CoinFox wrote earlier, while Macri is known to have supported, in his capacity of mayor of Buenos Aires, the First Latin American Forum on Virtual Currencies, he has not yet clearly expressed his position towards bitcoin in his new role of President of Argentina.

Due to economic instability, the volatility of national currency and general mistrust in the bank system, Argentina has been seen as a bitcoin heaven. Some see new possibilities for further bitcoin adoption. Julio Gil-Pulgar at bitcoin.com, for instance, suggested that Macri’s administration may be interested in using Bitcoin and blockchain in order to fight corruption. Moreover, one of the new ministries created by Macri is the so-called Ministry of Modernisation headed by Andrés Horacio Ibarra, an economist and politician, who was behind the First Latin American Forum on Virtual Currencies supported by Macri.

Redditors have also reacted. The user BitcoinDreamland called the end of currency controls in Argentina an event “huge for the bitcoin ecosystem”, while user drapetomano replied that while the news is generally positive, it may decrease circulation of Bitcoin in Argentina: “Many people use Bitcoin here in Argentina because of these restrictions. Some even became bitcoiners after using it as a temporary transfer to another country because they had no other cheap way of doing it.” Fintech and compliance executive and advisor Juan Llanos commented similarly on twitter: “Argentina just announced the end of forex controls. Local use of #bitcoin as relief valve is bound to dwindle.”

 

Diana Bogdan