Argentine newly elected President Javier Mile issued a statement on Friday stating that there is "no room for negotiation" regarding the decision to close the Argentine central bank. In addition, there are reports that the Argentine central bank governor nominated by Mile has refused to take up this position due to policy differences.
It is reported that Emilio Ocampo, a professor of economic history and former Wall Street investment banker, is the number one figure in Mile's "dollarization strategy". Mile plans to use him to implement plans to abolish the central bank and dollarization, while Ocampo will also be responsible for coordinating negotiations between the Argentine government and the IMF. Ocampo has recently published a paper on dollarization and has been developing a roadmap to implement this plan after the new government takes office on December 10th.
But according to local news reports on Thursday, Ocampo will no longer accept the position of Governor of the Argentine Central Bank, and sources close to Ocampo have also confirmed this.
The source said, "Ocampo's only reason for serving at the central bank is to achieve dollarization, and he will not go to the central bank to implement other plans."
After winning, Mile vowed to thoroughly reform Argentina's bloated government, cut expenses, open up the Argentine economy to the global market, and sell state-owned enterprises such as the oil company YPF. Blowing up the central bank and abolishing the peso were the core elements of his campaign, aimed at revitalizing the Argentine economy, reducing triple digit inflation rates, and repairing public finances.
However, implementing Millet's so-called dollarization plan may be challenging. Economists say that due to Argentina's economy on the brink of collapse, the country does not have enough funds to implement ambitious plans like dollarization. In recent years, the country has been unable to enter the global debt market.
Economist Alejandro Werner, who previously served as the head of the Western Hemisphere department of the International Monetary Fund, said, "Firstly, you need to enter the capital market and convert the entire currency base into US dollars, and you cannot enter this market."
Attitude changes?
However, by Wednesday, Miley's attitude seemed to have changed. In an interview, he said that although he liked Ocampo's plan, "we need to see if the market conditions allow for the implementation of Ocampo's proposed solution, and if Ocampo is prepared to implement a plan that is different from his initial idea.". This should also be the reason why Ocampo ran away early.
On Friday, Mille's office released a statement on social media X stating that there was "no room for negotiation" regarding the decision to close the Argentine central bank, which was his campaign promise. The statement also confirmed the appointment of oil industry veteran Horacio Marin as the President and CEO of YPF.
Millet has not yet confirmed a replacement for Ocampo, and the key position of Minister of Economy is another yet to be appointed position. In Wednesday's interview, when discussing potential candidates, Mille praised Luis Caputo. The latter served as the head of Latin American trading at JPMorgan Chase in the 1990s, later at Deutsche Bank, and served at the Argentine Ministry of Finance from 2017 to 2018.
Millay said, "There is no doubt that Caputo has the qualifications to take on this position. He has the necessary professional skills to solve our existing currency problems and find financial market solutions to end the central bank's debt problems and foreign exchange controls."
On Thursday, the trading price of the US dollar on the Argentine black market was approximately 1020 pesos to 1 US dollar, almost three times the official fixed exchange rate of 364 pesos to 1 US dollar.