Speaker unverified: evaluation

Transcript context

…How should they deal with debt deflation issues? People in Argentina took out plenty of loans under the expectation inflation would remain pretty high. Now inflation is much lower. They feel quite pinched. There are also people who vote. What should Milei do? Yes, the nonperforming loans have gone up. What Milei should do is put in place rapidly a resolution process for these loans, a market-driven resolution process. As I see it, Argentina is going through a major structural transformation, a major one. These will take years, not months. We would expect to see nonperforming loans also because sectors that were previously very protected have now been exposed to much more competition. Putting in place a resolution process that is market-driven—it’s not bailing out banks; I think that would be a mistake—I think that would be helpful. You do need to deal with it. The idea that somehow you want to prevent this from happening, I think, would be problematic. What is needed—and that’s the challenge right now for Argentina—is that while inflation has come down to 30 percent—it’s interesting. It’s one of those countries that understands the second and the third derivative of the price levels very well. They look at what’s happening with inflation, and they think, “Okay, this is pretty good,” but what’s less good, of course, is what’s happening with jobs. Growth is there, but it’s coming mainly from mining and agriculture, and much less from the job-intensive sectors—manufacturing—because they’ve also been open to competition now. There is going to be a difficult transition, and I don’t think the government should ignore that. The idea is to help workers and not necessarily protect the industry. The more it can do on that front, the better. Should we as economists be happy to see stablecoins introduced into Argentina becoming significant, possibly over the longer run, supplementing or even replacing the peso? Is that good or is it bad? It harms their state capacity too much? What do you think?…

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