The former president of the Central Bank Frederic Sturzenneger was part of the event “Milei at the Broadway Theater” and spoke regarding inflation targeting systems. Throughout his speech, the former head of Banco Ciudad He focused on dollarization, explained the reasons why it should not be applied in Argentina and revealed what would be the ideal monetary model for our country to advance economically.
“In the quest to free the Central Bank from the clutches of politics and be able to lower inflation, there are three possible alternatives to apply: make the BCRA independent by law, dollarization, and a monetary union with other countries,” Sturzenneger said. Without keeping the order of the listed, He spoke in the first instance of exchanging the peso for the dollar and considered it “something difficult to do.”
“It would not be the most appropriate. Dollarization is very difficult. It can’t be reversed quickly.”, held. And he narrowed down: “An example of this is what happened in Ecuador. He applied a dollarization, a president like [Rafael] Correa, who did not agree with the model, but might not turn it around for fear that the economy would collapse.
Along these lines, he pointed out another “two minor but equally important problems”: “On the one hand, dollarization implies that one has to buy the bills that we use as paper for the transaction. This will have a great cost. And on the other, dollarization is a strictly unilateral decision. One decides in a moment that the current currency is the dollar and the next president you change things from place “.
Once the clarifications were made, he later delved into the possibility of granting independence to the Central Bank by law, a model applied by the former Minister of Economy Domingo Horse. “Under Cavallo, Argentina had a fixed exchange rate regime. We got deflation and an independent BCRA. It worked. But then came Kirchnerism and took away the independence of the monetary organization. There we realized that a law is not enough to make it independent”he explained.
At the end of his presentation, Sturzenneger emphasized the development of a monetary union with Latin American countries. Although, like the other proposals, he remarked that “it has its degree of difficulty”, he described it as “an ideal project that might help us more”.
“The regional common currency, which was not something that I did not defend before, would allow us now accommodate and adjust prices in relation to the economies of other countries also use it. I might do that job and it’s a very good thing for the economy”, he claimed. And he concluded: “It would also get rid of the need to buy foreign currency or exchange the peso for another coin and meets the main and most important objective, which is to get the BCRA off the radar of politicians”.