Argentina President Keen On Making Bitcoin Bitcoin A Legal Tender, But Central Bank Objects

Following El Salvador's decision to utilize Bitcoin as a legal tender Argentina President Alberto Fernandez has indicated support for digital assets, asserting there is no reason to push back against the emerging asset class.

On August 12, Thursday, Fernandez spoke to the local media outlet Caja Negra during an interview regarding exploring a central bank digital currency (CBDC) or even recognizing Bitcoin as legal tender. He said, "there is no reason to say no, perhaps that is a good path to take." 

He continued, "They say the advantage is that the inflationary effect is largely nullified" due to the asset's maximum supply of 21 million coins ever to exist.

Fernandez, too, has his anxieties regarding viewing the primary cryptocurrency as a hedge against inflation. He accepts by saying, "It's a global debate, and I must confess that it's a topic [that should be approached with] caution. In my case, there is caution because of how unfamiliar it is and because it's hard to understand how this fortune materializes."

However, Miguel Pesce, the present of the Central Bank of Argentina, objects to the idea because Bitcoin is not considered as a financial asset. It fails to be backed by any asset and cannot guarantee a stable yield. The significant implication by Miguel was how these instruments could be used to take advantage of unsophisticated investors in the form of scams.

The banker considers it unfair if this money coming from cryptocurrencies mixes with the traditional exchange market. He stated that the Central bank of Argentina would try to avoid this. 

A fair amount of emphasis was given on such mixes as they could be "very damaging for the instrument and also for the Central Bank regulations."

On August 12, in a digital financial conference in a discussion pertaining to avoiding linking bitcoin with the traditional exchange market, he said, "We are going to regulate the intersection of intersection of Bitcoin with the payment system and the exchange market." 

At the same time, he established that BTC's scarcity concedes the price to continue rising, thereby creating an impression that it is indeed a financial asset. Pesce said, "The Central Bank is not affected by the fact that these types of instruments can be used for transactions."

Cash has been the most favored mode of payment in the country. Over 90% of the transactions in the nation involve cash. The Argentinian peso has lost roughly 85% of its value against the US dollar in the past five years.

The country has been coping for years; this June, consumer prices increased by more than 3%. Hence, some analysts concluded that the 12-month inflation rate has grown above 50%.