A proposal to eliminate the physical representation of the Argentine Peso, in order to streamline specific state processes and reduce tax evasion, has been presented by former banker Carlos Maria De Los Santos. The plan, identified as “Argentine Digital Peso,” also predicts that its implementation would lead to lower taxes and bring a surplus to the Argentine economy.
Digital l Peso Proposal to Stop Tax Evasion
On Nov. 4, former Argentine banker and president of the Productive Inclusion Foundation Carlos Maria De Los Santos unveiled a proposal called the “Argentine Digital Peso,” which would encompass the elimination of the physical representation of the currency in Argentina and the digitization of all economic activity. De Los Santos explains that the implementation of this plan, which would supposedly be at no additional cost to the Argentine state, would allow banks to have oversight of all transactions made by citizens.
Bank account data would substitute physical bills, with stores and commerce having to rely fully on such data to conduct financial transactions. In this sense, this control would bring the benefit of virtually eliminating tax evasion, with citizens’ transactions being available for the enforcers to review.
De Los Santos stated that the current tax evasion rate is around 50%, and collecting all of these funds would allow Argentina to achieve an economic surplus of up to 20% yearly, suppressing tax deficits. This widespread tax collection could also ostensibly result in lower taxes for all taxpayers.
More Benefits and Similar Proposals
Other benefits preached by the former banker include the establishment of higher interest rates for savers, who would be enticed to put their funds in the system, avoiding investments in higher-risk speculative assets. This could possibly integrate large amounts of capital that Argentines currently have in international markets, or just outside of the banking system.
Other proposals following this train of thought have been presented before. In June, Chaco, Argentina’s governor, Jorge Capitanich, also talked about the benefits of having a single digital currency. At that time, Capitanich declared:
You have to have a shock policy, the possibility of having a model that implies applying digital currency as the sole legal tender. We have to recognize the factual existence of a bi-monetary regime.
Capitanich’s proposal includes the deposit of all foreign currencies, including U.S. dollars, into national banks, which would exchange these for the proposed digital currency. This would be the only way of transacting with these currencies in the hypothetical system.
However, Argentina has been one of the countries in which cryptocurrencies have been more popular, being the 13th-ranked country with the most crypto adoption, according to Chainalysis. The existence of such adoption and of stablecoins could make difficult the application of the proposed changes to Argentina’s transactional economy.