Speaker unverified: belief

Transcript context

…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? The way I think about it is that some of these innovations serve as a disciplining device. The fact that people in the country have an option to hold their money in more stable forms of currency is a disciplining device on the government and what it can do, and therefore, puts pressure on having good policies in the country. Right now, we know, but do we want to move to a situation where Argentina is dollarized? By the way, initially, actually, Milei campaigned on the grounds that he was going to move to a dollarized economy, and he hasn’t done that. I would say that I think that’s good because, first of all, there is no panacea in terms of saying just because you’re dollarized, you are safe, or you’re a well-managed country. The two main dollarized economies of the world—Ecuador, El Salvador—are all in programs with the IMF because ultimately, if you don’t have the right fiscal policies, you’re going to end up needing a bailout in any case. That’s not a panacea. Of course, I am of the view that monetary policy is still very valuable for stabilizing economies. If you can get the credibility and the central bank independence, then having your own currency gives you much more ability to stabilize your economy. Take, say, the euro area. Both Milton Friedman and Paul Krugman thought the euro was a mistake. They disagree on many other things. There was a major euro crisis. What did Friedman and Krugman get wrong? If fixed exchange rates aren’t so great, why not just let the different European nations have floating rates to some extent? Maybe Benelux would be a fixed rate, but the others let them float. Same argument.…

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