Milei abandons dollarization as central bank pick declines

Argentina’s president-elect, Javier Milei, known for his libertarian stance, faces a setback as Emilio Ocampo, the intended leader for the country’s central bank, declines the position due to policy differences. Ocampo, a proponent of abandoning the Argentine peso in favor of the US dollar, had been working on a plan to implement this strategy. Milei, who previously emphasized the non-negotiable nature of dollarizing the economy, now appears to be reconsidering this flagship policy.

Milei, a supporter of former US president Donald Trump, had positioned Ocampo to head the central bank with the mission to eventually shut it down. However, reports suggest that Ocampo will no longer accept the post, as he was committed to dollarization and not to implementing a plan he disagrees with.

While Milei’s office insists that the closure of the central bank remains non-negotiable, the focus on dollarization seems to be fading. The president-elect mentioned liking Ocampo’s plan but expressed the need to assess market conditions and Ocampo’s willingness to implement a different plan.

Milei has not confirmed an alternative pick for the central bank chief, but local media suggests that Demian Reidel, a former vice-president at the institution, is being considered. The position of the economy minister also remains vacant, with speculation surrounding Luis Caputo, a former finance minister under the administration of Mauricio Macri.

Caputo, praised by Milei for his financial expertise, is viewed as a capable candidate for the job. However, his final decision is yet to be determined. As Milei works to finalize key appointments ahead of his December 10 inauguration, local financial markets are showing signs of stress. The central bank struggles to find buyers for short-term peso-denominated debt, signaling challenges in containing inflation amid market uncertainty.

The exchange rate on the black market is almost triple the official rate, highlighting the economic challenges faced by Milei’s administration. His task is to dismantle the outgoing government’s complex web of controls without triggering hyperinflation and economic collapse, presenting a significant challenge for the incoming president.

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