Argentina’s province of San Luis has announced plans to issue a digital currency pegged to the U.S. dollar in an apparent bid to help contain inflation. The government said it will spend 100 million Argentine pesos ($1.3 million) on developing the project with IT company OLXA Group, which will help it create a blockchain-based platform and wallet (apparently not on Ethereum). A pilot program is set to launch within 90 days.”
Of course, the stablecoin solution to Argentina’s inflation woes is not quite what the people of San Luis have in mind. The province is attempting to issue a digital currency pegged to the U.S. dollar, which would be used alongside the peso in an apparent bid to help contain inflation.
Stablecoins are cryptocurrencies with a fixed price and are typically backed by fiat currencies or gold reserves. They aim to provide an alternative to volatile cryptoassets like Bitcoin or Ethereum that have experienced extreme fluctuations in price over short periods of time this year (Bitcoin has lost about half its value since December).
San Luis Opts For Stablecoin
It appears that Argentina’s province of Salta has taken a step in the right direction, with its plan to issue a stablecoin backed by the U.S. dollar.
According to local news source Clarin, one of the purposes of the initiative is to “stabilize and express value” as a result of “the increase in prices and devaluation of the peso.”
The article also states that another purpose for creating this digital currency is to “promote [Salta’s] tourism and exports.”
A government-backed stablecoin would help Argentina solve some of its economic problems.
Stablecoins are cryptocurrencies whose value is pegged to another asset, such as gold or the US dollar. The most famous example is Tether (USDT), which has been criticized for not being fully backed by fiat reserves. A state-issued e-peso could be used to combat inflation, which has plagued Argentina since at least 2001 when it was abandoned by the International Monetary Fund after defaulting on its foreign debt obligations of $80 billion dollars.
