One of Javier Millay's main campaign proposals was the dollarization of Argentina and the closure of the central bank (BCRA). These ideas were promoted by economist Emilio Ocampo, who was an advisor at the time.
As the promoter of these policies, he was expected to take over as central bank governor with the mandate of carrying out the shutdown of the central bank.
However, a few days after Milay's election victory, disagreements arose over José Luis Caputo's appointment to the Economy Ministry, creating tension within the economic team. Finally, Mr. Ocampo ultimately did not become BCRA president.
Almost two years later, he revealed why he did not accept Millay's proposed position to shut down the BCRA. “In November 2023, it became clear to me that this government would not proceed with public dollarization. I therefore decided not to take a position on the BCRA,” he disclosed through a publication on his personal X account.
“It is also clear that the government has not changed its mind on this issue and that its intention is to move forward with a separate currency exchange regime. It remains to be seen how that will turn out, but it appears that it will require some sophisticated fine-tuning by BCRA technocrats,” he added.
This passage from Ocampo's text reveals differences within the economic team and within. It highlights the complexity of implementing financial reforms such as dollarization in Argentina.
For this reason, the author of this book Dollarization, Argentina's solution “Changing the economic policy regime without changing the economic system is like changing the oil in a broken engine,” he said, adding: “It will only accelerate the transition from illusion to disillusionment.” He then elaborated on his position:
I continue to believe that dollarization is the best option to complete the transition from a corporatist and protectionist system to an open and competitive economic system. And we also believe we face a unique opportunity to do so. So I will continue to support her.
Emilio Ocampo, Argentine economist and professor.
But he made it clear that implementing this change will not be easy, stressing that massive and sustained support from voters will be needed over several elections. As reported by CriptoNoticias, the economist raised the issue after Javier Millay's political force, La Libertad Avanza, won an important victory at the national level in the last parliamentary elections on October 26.
In his opinion, this “corporatist-protectionist regime” creates economic incentives for politicians, businessmen, and union members, and produces macroeconomic consequences that are harmful to society, such as the overissuance of pesos.
This particularly affected the most vulnerable sectors. It caused high inflation rates, reduced purchasing power, and increased economic inequality.
X's publication is accompanied by a document in which Ocampo reviews Argentina's history.
Ocampo points out that convertibility was the only relatively successful attempt to change Argentina's economic system. In 1991, Domingo Cavallo introduced convertibility systemfixing the Argentine peso and the US dollar at 1:1 parity.
Convertibility made it possible to control hyperinflation and create monetary stability for more than a decade. However, this system ended explosively in 2001 due to the accumulation of fiscal and financial imbalances.
Mr. Ocampo was clear on this point, pointing out that:
Convertibility is much more than just an anti-inflation program, it has been the most durable and credible attempt to change an economic system of populism, corporatism and protectionism. Its collapse in 2001 demonstrated the enormous power of interest groups generated by the same system. The means they used to restore it was the devaluation of the peso, an important part of their mechanism. The issuance of excess pesos and their devaluation is part of a cycle that has been repeated since 1946. High, persistent, and unstable inflation is a structural feature of this system.
Emilio Ocampo, Argentine economist and professor.
Ocampo concluded: “Javier Millay understood this very well. In fact, he entered politics to change the system. But to achieve this, the first major reform he must carry out is one that ensures monetary stability.”
