alternatives to dollarization ?

[charlesfradley]

Why are Milei and Argentina obsessed by the US dollar?

Over the last year the Mexican Peso and the Brazilian Real have outperformed the US dollar. And inflation in Brazil has stabilized over the last couple of years at a few percent annually. Brazil has the largest GDP in Latin America.

Argentina's largest trading partner by far is Brazil 16.3% of all trade (more than with any other country), versus 6.62% for the USA,

There is a decent case for Argentina to adopt the Brazilian Real as currency, that would greatly facilitate trade between the two partners.

Indeed, there could be a case for the Mercosur countries to create a common currency, similar to the Euro in the EU. Perhaps for Brazil to adopt the Brazilian Real would be the first step.

Adopting the US dollar would be a dangerous step since it would put Argentina at the mercy of the US Reserve Bank system with no control over it at all.

Instead, adopting a new Mercosur currency would give Argentina some voice in Mercosur interest rates, and allow Argentina to dump the worthless Peso.

And there is a good possibility that a new Mercosur currency would be stronger than the US dollar.

P.S. the Brazilian Real is a widely traded and easily convertible currency, and Real denominated savings accounts offer some of the highest interest rates in the world, and is the only currency where interest rates on savings generates a positive return versus inflation. e.g. interest rates are about 12% versus inflation of about 5%.

 

[retiredbanker]

Why are Milei and Argentina obsessed by the US dollar?

Over the last year the Mexican Peso and the Brazilian Real have outperformed the US dollar. And inflation in Brazil has stabilized over the last couple of years at a few percent annually. Brazil has the largest GDP in Latin America.

Argentina's largest trading partner by far is Brazil 16.3% of all trade (more than with any other country), versus 6.62% for the USA,

There is a decent case for Argentina to adopt the Brazilian Real as currency, that would greatly facilitate trade between the two partners.

Indeed, there could be a case for the Mercosur countries to create a common currency, similar to the Euro in the EU. Perhaps for Brazil to adopt the Brazilian Real would be the first step.

Adopting the US dollar would be a dangerous step since it would put Argentina at the mercy of the US Reserve Bank system with no control over it at all.

Instead, adopting a new Mercosur currency would give Argentina some voice in Mercosur interest rates, and allow Argentina to dump the worthless Peso.

And there is a good possibility that a new Mercosur currency would be stronger than the US dollar.

P.S. the Brazilian Real is a widely traded and easily convertible currency, and Real denominated savings accounts offer some of the highest interest rates in the world, and is the only currency where interest rates on savings generates a positive return versus inflation. e.g. interest rates are about 12% versus inflation of about 5%.

The Brazilian Real accounts can be opened using platforms such as Wise.com, but Argentina Peso are not tradable on such platforms.

Have travelled the world and universally have found US dollars not only acceptable but coveted. I can truthfully say that nobody has EVER asked me for payment in Mexican pesos or Brazilian rials. The US dollar, while admittedly shaky these days, is still best of the worst. Lucky for US expats here living on dollars.

 

[charlesfradley]

Have travelled the world and universally have found US dollars not only acceptable but coveted. I can truthfully say that nobody has EVER asked me for payment in Mexican pesos or Brazilian rials. The US dollar, while admittedly shaky these days, is still best of the worst. Lucky for US expats here living on dollars.

I am not talking about the world, I am talking about Latin America....
What is best for Latin America might not be the best for US dollar based expats.
But since I will be a US dollar based expat myself, I feel my proposal would be better than the status quo, and probably more politically palatable than dollarization.

In my experience, throughout Europe, US dollars are accepted, but Euros are much preferred.

 

[retiredbanker]

I am not talking about the world, I am talking about Latin America....
What is best for Latin America might not be the best for US dollar based expats.
But since I will be a US dollar based expat myself, I feel my proposal would be better than the status quo, and probably more politically palatable than dollarization.

In my experience, throughout Europe, US dollars are accepted, but Euros are much preferred.

I can guarantee you that NOBODY in Argentina hordes Mexican pesos nor Brazilian rials in their homes. While dollarization in Argentina will, in my opinion, not be enacted, the US dollar will remain king here for the foreseeable future.