Argentina Embraces Dollar Payments: Central Bank’s Bold Move

Argentina’s central bank has taken a bold step towards currency liberalization, mandating payment intermediaries to enable debit card transactions in US dollars by February 28, 2025. This move marks a significant milestone in President Javier Milei’s ambitious plan to dollarize the economy.

The new policy allows individuals and businesses to use their preferred currency for daily transactions, promoting currency competition within the domestic market. While voluntary for merchants, payment service providers must develop and offer the necessary tools by the specified deadline.

This initiative is part of a broader economic strategy that has already shown promising results. Argentina’s inflation rate, which soared to 211% in 2023, is projected to fall below 30% in 2025. The country’s risk premium has also declined significantly, dropping to 610 points, the lowest since 2018.

Argentina Embraces Dollar Payments: Central Bank’s Bold Move. (Photo Internet reproduction)

The central bank has introduced additional features to support this transition, including a new “Immediate Debit” variant. This allows consumers to make fixed installment payments in both Argentine pesos and US dollars with enhanced security measures.

Argentina Embraces Dollar Payments: Central Bank’s Bold Move

As Argentina navigates these economic changes, challenges remain. The country must carefully manage its international reserves, which have grown to $32 billion, up from a low of $22 billion in 2023.

The government is also negotiating a new loan agreement with the IMF, expected to be announced in March with additional financing of around $10 billion. Looking ahead, the success of this policy will depend on how businesses and consumers adapt to these new options.

The coming months will be crucial in determining whether these changes contribute to Argentina’s financial stability and economic growth, potentially setting a precedent for other countries facing similar economic challenges.