Javier Milei Advocates Dollarization, But Paul Krugman Prefers Euro Adoption For Buenos Aires — Here's Why

The pro-Libertarian presidential frontrunner of Argentina Javier Milei wants to do away with the peso for “dollarization.” But economist Paul Krugman has a different take.

Milei believes dollarization is essential to tackle the 113% inflation rate. Economist Emilio Ocampo, an adviser to Milei, emphasized in an interview with Bloomberg that dollarization offers “a means to achieve economic and political objectives.”

Ocampo detailed a plan where replacing pesos with dollars would be “voluntary” during the first year of Milei’s administration. He also highlighted the establishment of an “equilibrium exchange rate” and the removal of foreign exchange restrictions.

However, Krugman feels that the peso should instead be replaced with the euro, provided that Argentina’s primary trade is with the European Union.

“Argentina does almost twice as much trade with the European Union as it does with the US. If anything, they should adopt the euro,” Krugman’s recent tweet read.

Following the primary results where Milei outshone his contenders, the peso plummeted approximately 20%, reinforcing his stance.

Photo by Ibrahim Boran on Unsplash

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