Milei’s decree legalizes signing contracts in US dollars, Bitcoin, milk

The president said on Thursday that there will be no restrictions on the blue dollar although the decree does not include changes to foreign currency law

Hundred dollar bill. Money isolated on white background. American cash

Argentine financial wisdom often dictates saving in US dollars. The country has a swollen market of multiple exchange rates for people sidestepping restrictions on changing their pesos. The bustling Florida street in Buenos Aires is filled with people selling dollars illegally, known as arbolitos — Spanish for “little trees.” Under the country’s new administration, which seeks to dollarize the Argentine economy, that ecosystem is set to change. 

President Javier Milei said on Thursday that the government would legalize the informal dollar market, in his first interview after announcing a controversial economic megadecree

“Today in the free market you can buy as many dollars as you want and nobody will prosecute you,” Milei said in an interview on Radio Rivadavia, referring to what is popularly known as the “blue” dollar market as the “free” market. The parallel exchange rate ended the day at AR$990, AR$5 pesos lower than Wednesday and AR$147 less than the official exchange rate.

The decree, however, does not refer to the Penal Exchange Law, the legislation that forbids foreign currency to be exchanged outside authorized agencies.

“Now you can enter into contracts in foreign currencies, and they must be fulfilled the same way,” he said, referring to the decree. “Do you realize the shock of freedom this implies?”

Argentina has a rocky history of regulating foreign currency. Mauricio Macri’s government enforced restrictions for buying dollars in 2019, which Alberto Fernández’s administration continued and expanded. At the time of writing, Argentines can only buy a maximum of US$200 a month for savings. The country’s record-low international reserves, calculated at negative US$11 billion, are the main factor for such regulations. 

For that reason, some resort to the “blue” market, which is illegal although national administrations somewhat tolerate it. However, during Fernández’s last days in office, the government cracked down on several cuevas, i.e. illegal exchange houses. Milei said on Thursday that he would not immediately eliminate the restrictions, collectively known as the cepo — Spanish for “clamp”.

Multiple elements of Milei’s decree point to a de facto dollarization, particularly in contracts. Article 250 establishes that contracts can be agreed in any currency, “whether or not it is legal tender in the country.” Article 257 outlines a similar policy for rental contracts, adding that tenants cannot demand that payments be accepted in a currency other than the one established in the contract.

Foreign Minister Diana Mondino went further and pointed out that contracts could be agreed in cryptocurrency after the decree goes into effect. 

“We ratify and confirm in Argentina, contracts can be agreed in Bitcoin,” she said on X (formerly Twitter). “And also any other crypto and/or commodity such as kilos of beef or liters of milk.”

Mondino, an economist, has previously come under fire for defending the legalization of a free organ market

The DNU has yet to take effect because the document failed to include an article indicating that it would do so upon its publication in the Official Bulletin.


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