Central Bank of Argentina cannot stop inflation and force people to use bitcoin
Argentina’s inflation rate exceeds 54%
The Argentine central bank has tightened monetary policy three times last month, and inflation is still accelerating at a rate of nearly 55%. Bloomberg pointed out:
The inflation rate rose to nearly 55% in March, and the consumer price index rose 4.7% in the month, exceeding Bloomberg’s survey of analysts.
The unstable economic environment has prompted many traders and investors to focus on Bitcoin. As a result, Bitcoin transactions from Argentina have reached record levels, and the latest data from LocalBitcoins / coin.dance shows.
The Argentine economy is affected by long-term inflation, so that no monetary measures are feasible. According to the British "Financial Times" report,
Argentina has entered a vicious circle, and the need for millions of dollars in a liquidity-deficient market will weaken the peso, as it did in early March. The depreciation of the exchange rate quickly led to inflation, dollarization of the portfolio and rising interest rates, and now is the only means by which the central bank defends the currency.
Replace the Argentine Peso with Bitcoin
The fact that Bitcoin is resistant to inflation makes it particularly attractive in this environment.
As a result, many people see Bitcoin as a potential substitute, and they even advocate to the government to better integrate cryptocurrencies into the Argentine economy.
Bitcoin has been integrated into many commercial activities. For example, in 37 cities, public transport users indirectly use Bitcoin to pay for their rides, while Bitcoin ATMs are becoming more compelling in Buenos Aires.
Most relevantly, the government of President Mauricio Macri has shown interest in Bitcoin and its underlying technology blockchain. For example, in March 2019, the government announced a partnership with the block link lab of bitcoin exchange giant Binance. In the announcement, the government promised to invest in a 1:1 ratio.
In addition, in March 2019, continuous investor and Bitcoin supporter Tim Draper suggested that President Markley attract foreign investors by dramatically changing the national economy and replacing the Argentine peso with bitcoin.
Draper even bet with the Argentine president on the price of bitcoin, the value of the peso is more than bitcoin, my investment in the country has doubled; if the value of bitcoin is more than the peso… it will be a The perfect solution because there is no confidence in the currency.
Article source: Thebitcoinnews