Carlos Maria De Los Santos (ex-banker) has proposed to remove the physical representations the Argentine Peso to help streamline certain state processes, and to reduce tax evasion. 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 Peso Offers to End 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 the benefits of this plan to banks, which is supposedly free for the Argentine State.
With bank account data replacing physical bills, commerce and stores would be able to completely rely on these data in order to make 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 claimed that Argentina currently has a 50% tax evasion rate. Collecting all funds would enable Argentina to have an economic surplus up to 20% per year, which could help reduce its tax deficits. This massive tax collection may also result in lower taxes.
Additional Benefits and Similar Ideas
The former banker also advocated higher interest rates to savers. This would encourage them to invest in the system and avoid higher-risk, high-reward speculative investments. It could allow for the integration of large sums of capital, which Argentines have on international markets or outside of the bank system.
There have already been other proposals that follow this line of thinking. In June, Chaco, Argentina’s governor, Jorge Capitanich, also talked about the benefits of having a single digital currency. Capitanich stated:
A shock policy is necessary. This could include the option of using digital currency solely as your legal tender. It is important to acknowledge the existence and benefits of a bi-monetary framework.
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. It would be the only method of transacting in these currencies within the proposed system.
Chainalysis has found that Argentina ranks thirteenth among the top countries with crypto adoption. The existence of such adoption and of stablecoins could make difficult the application of the proposed changes to Argentina’s transactional economy.
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