«I am also clear that Argentina has an enormous difficulty because takes more dollars out of the country than it brings in because It has part of its economy in black and because it also has problems in the tax system that limit development. We are going to launch the Argentine digital currency«, expressed Sergio Massa during the presidential debate in Santiago del Estero.
The proposal, the Minister of Economy and presidential candidate later explained, will be presented in Congress in order to become law, but raised several concernsespecially, regarding its implementation.
The initiative, in reality, is not new. The economist of the Productive Inclusion Foundation, Carlos de los Santos, presented it to Massa himself in 2019, when he still led the Chamber of Deputies. First of all, he proposes the creation of the Digital Argentine Peso (PAD)which provides eliminate all circulating bills and coins so that all payments are made entirely virtually.
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Specifically, the objectives of the proposal are two: increase revenue for solve the fiscal deficit and add internal financing. Furthermore, this measure aims to improve levels of informality. However, one of the biggest doubts has to do with how to include within the system people who do not have connectivity and keep their economy “in the black.”
According to what De los Santos explained, with the PAD all collections and payments would be recorded, which would reduce evasion and improve the fiscal front.
«In recent years, VAT tax evasion ranged between 45 and 53%. And evasion of labor laws is in the order of 40%, according to different business entities. By eliminating the evasion of these two items, you not only overcome the current deficit, but they would have a surplus of 10% of the product to lower taxes,” he calculated in dialogue with TN.
How currency can be digitized
In this sense, a document that specifies the initiative detailed that to digitize the currency two paths can be taken: inside the financial system and outside the system, such as cryptocurrencies. The proposal presented by De Santos seeks to digitize the peso through the financial system.
“The PAD replaces the pesos in circulation that are scattered and unused in the pockets of Argentines, transforming them into deposit account balances that the holders of those banknotes have or will have in the banks, balances that they will be able to access through cards, cell phones and/or web alternatives based on the accreditations generated with the implementation,” the letter indicated.
“It implies that all payments and collections will no longer be made with currency notes and will be made through debits and credits made through the instruments that financial institutions have«, specified the proposal.
To move forward, first must be approved in Congress. Furthermore, always according to De Santos’ proposal, it should be modify the Banking Secret to “allow the active and passive operations of banks to be reported to the collecting agency,” as well as eliminate the printing of banknotes by the Mint.
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Thus, with the implementation of the PAD, all payments are recorded in bank accounts and exchanges of goods are excludedexcept for registrable assets such as real estate, automobiles or others. Transactions paid with dollars (cash) are also excluded..