"A Dollar For Argentina": The Wall Street Journal's Solution For The Economy



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Thursday's editorial The Wall Street Journal It was dedicated to the new complexes that Argentina is going through. In this document, the New York newspaper has launched a "solution" to the problem by proposing dollarize the economy and "bury" the peso.

"Argentina has again had problems, as is often the case.The possibility that the Peronists retain power has forced the Argentineans to escape from the peso to the dollar, and on Monday the Mauricio Macri's center-right government has imposed foreign exchange controls.Best idea: replace the peso with the US dollar as the legal currency of Argentina, "says the text.

This is the Macri's paper proposal and, with it, "breaks the horrible cycle" of economic crises and is transformed into "the leader who dared to defend the Argentine savings".

The article, signed by the editorial board of the newspaper and titled One Dollar for Argentina ("A Dollar for Argentina"), traces the political events and the last time in our country (STEP , rising dollar, country risk), which led to economic measures of capital control and re-inflation of debt announced by the government.

"The elections are held in October, but the victory in the August primaries of the leftist populists Alberto Fernández and Cristina Kirchner went into a monetary panic. The demand for dollars has risen, the peso has devalued 20% and the reserves of the Central Bank continue to fall, "says the report. WSJ.

The editorial of the WSJ in favor of dollarization. (Photo: capture of the Wall Street Journal).
The editorial of the WSJ in favor of dollarization. (Photo: capture of the Wall Street Journal).

For the financial newspaper, Macri's "peronist" measures "have done nothing to restore the government's credibility". While ensuring that Fernández "promotes the idea of ​​chaos", stating that the country is in a "virtual flaw".

"Those who propose to dollarise find resistance in Peronism, which depends on inflation to finance populism when its income is low, "he said.

Although "dollar demand suggests that Macri could rely on popular support to adopt the dollar as the national currency, Argentine lawyers diverge as to the legality of dollarization according to the Constitution, but our sources believe that Macri could dollarize with the support of a congressional majority".

According to WSJ, the antecedents of Ecuador, Panama and El Salvador (three Latin American countries that have adopted the dollar as a currency) are positive: "Panama has been using the dollar as legal tender since 1904, and El Salvador and Ecuador have dollarized in 2000. A banking crisis and El Salvador reduces its interest rate El Salvador and Panama have today the lowest debt ratios in Latin America and the deadlines are the lowest in the world. Longer Ecuador has unmatched price stability for at least half century "

Negative point, the editorial emphasizes that "Argentina you would lose the benefits of a central bank when printing your own mottosays seigniorage. But it's a political excuse disguised as economics. What is lost from seignorage will be more than offset by the end of the weight crises. "

"Dollarization eliminates the moral hazard that the Central Bank's bailouts are encouraging in the banking system," they explain. "Argentines should also have the right to keep their dollars on the outside if they wish. this would alleviate the fear that the government will put a bank corralito in its bank accounts, as they did in 2001, "he recalls.

In conclusion, he launched more criticism on Peronism: "The fact that Macri decided to dollarize would break this horrible cycle, give Argentines a store of value and a currency they can trust. He may not save his presidency, but he would leave him the legacy of being the leader who dared to defend the Argentine economies of a future marauding government. "

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