Monetary issue in Argentina is the largest in the last 30 years
In a complicated economic context, Argentina has registered the highest amount of monetary issue in the last 30 years. This was stated in an article by Infobae Económico, signed by Matías Barbería.
According to that article, the causes of this gigantic fiat money issue are: „The fall in revenues, the lack of access to the debt market and the increase in spending that became necessary to face the economic impact of the COVID-19 coronavirus pandemic“. According to the publication, accumulated data from the year to date show that for every new Argentine peso in deficit, the Central Bank issues a new peso to finance the Treasury.
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On the other hand, Barbería quoted a report by the Argentine Institute of Fiscal Analysis (IARAF) signed by Nadín Argañaraz and Bruno Panighel, where they pointed out:
„As of March 2020, isolation generated a rapid fall in economic activity that had two key effects on public finances. Firstly, the need to increase social and health spending to support a large portion of the population without its own income, and secondly, a large decline in revenue tied to the level of activity and dependent on the collection of consumption taxes“.
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In addition, Barbería pointed out that so far this year the Central Bank of Argentina (BCRA) has issued more than one billion pesos to finance the public sector. „Of course, this is a historical nominal record Bitcoin Evolution, but in countries with more than 50 points of annual inflation and more than a decade of high inflation, nominal records say little. The figures are constantly breaking records,“ said Barbería. Still, he acknowledged that this year’s monetary expansion is unusual.
Argañaraz and Panighel made a comparison with annual GDP to get a better perspective of the scenario. And, they found that it is the most important monetary expansion of the last 3 decades. They specified the following: „In the period up to May 2020, the BCRA distributed a total of 740 billion in profits and a total of 312 billion in temporary advances. These two components constitute what is called direct assistance from the Central Bank to the Treasury and represent an unsupported (spurious) monetary issue. The 1,052 billion in direct assistance from the BCRA implies an issue of 3.5% of the estimated GDP for 2020, making it the highest figure in the last 30 years“.
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Kryptom currencies as an option to weight devaluation
Kryptom currencies could be an option in the face of a possible devaluation of some fiat currencies. This was recently reported by Cointelegraph en Español, based on an article by Ámbito, published last May 22nd. And because of the situation in Argentina, this could also be an alternative for the citizens of that country.
Ámbito’s publication explained that multilateral organizations such as the International Monetary Fund, the World Bank and dozens of central banks around the world have made it clear that the coming economic crisis is important. „So far, a 3% decline in the global economy is expected,“ the article noted.