"We will implement a digital Argentine currency, accompanied by money-laundering legislation which helps those with money abroad to be able to repatriate it without paying taxes," Sergio Massa announced in Argentina's presidential debate last Sunday evening.
The proposal was thin on details, so what is it all about? Even though so far there have been no official comment, from the candidate’s entourage they hint that it is a proposal by the Ministry’s chief advisor Leonardo Madcur – a man that Massa trusts implicitly. The San Juan-born official heads the technical meetings with the International Monetary Fund (IMF), has overseen every technical review and together with Guillermo Nielsen and Roberto Lavagna, he handled the restructuring of Argentina’s biggest debt.
However, the man who since 2019 has been going around the desks of officials, businessmen and educational institutions with the idea of introducing a “Digital Argentine Peso” is actually Carlos María de los Santos, an economist from Chaco Province, the president of the Fundación Inclusión Productiva and ex-director of the Nuevo Banco del Chaco.
The main idea behind De los Santos’ bill, which he assures would help reduce tax evasion and lower taxes, is to eliminate the peso banknotes currently circulating and to replace them with a digital currency: the Digital Argentine Peso (PAD). This initiative is part of a comprehensive proposal seeking chiefly to eliminate the fiscal deficit without austerity, cut taxes, reduce tax evasion and inject money into the economy without actually printing it.
“The Digital Argentine Peso would allow all transactions to be detected and recorded. Tax evasion is around 50 percent today. Thus, banknotes and coins in circulation would be eliminated and everything would come from bank balance,” De los Santos explains.
Furthermore, he argued that not only would the move eliminate the fiscal deficit, Argentina could reach a surplus of 15 to 20 percent thanks to it.
“Taxes would go down and people would produce and consume as they should,” he stated.
According to De los Santos, the Digital Argentine Peso would open the door to a proactive financial system, safeguarding savers with positive interest rates so as not to resort to speculative investment and to be able to obtain affordable credit for the real economy.
“It’s a tool for growth, sustainable development and inclusion,” he stresses.
When consulted on what would happen in places in Argentina with no connectivity, he said the state must deliver the service for this payment method to be applied, although he said only five percent would need this. “Fully 95 percent of the territory has connectivity,” he said, citing official national data.
De los Santos said that the bill was finished in 2019 and on December 26 that year he presented it to the then-Chamber of Deputies speaker Sergio Massa. He has also introduced it to academic and business circles, seeking support.
“We met with management from the UIA [Argentine Industrial Union], the CAME [Argentine Confederation of Medium-Sized Enterprises], among others," he said.
He also pointed out that there are ongoing talks to show this to the libertarian rival candidate Javier Milei, without specifying whether they are talking with his economic team directly.
"It doesn’t matter where the work comes from, but that it’s put into practice”, he said.
The most relevant aspects of the ‘Argentine Digital Peso,’ according to De los Santos:
– It can be implemented from the financial system, which would enable an immediate application using banking structures and technology.
– It requires no printing of money.
– It bears no costs to the state.
– It would redirect circulating money now in the power of the public and banks into consumption credit, working capital and productive investments, both public and private.
– The recovery of current money in circulation by the financial system and the account creation arising from those funds would help treble banks’ credit capacity.
– All monetary transactions would be recorded, which would eliminate tax evasion. Thus, this would lead to greater collection without any new levies and adjustments, regularising the informal employment market and redistributing the current tax burden in favour of production and consumption.
– It does not go against policies and/or demands limiting financing by public and private national and international bodies.