The government of Javier Milei has already set its sights on a reform that promises to shake the foundations of the Central Bank. The idea is to change the entity’s Charter so that it dedicates itself almost exclusively to defending the value of the peso and puts an end to the racket of printing money to cover the fiscal deficit. The move has already sparked a debate that divides opinions between those who see it as salvation and those who anticipate disaster.
According to information gathered by this media outlet, the reform focuses on three central axes: prioritizing currency stability, reinforcing the BCRA’s independence from political power, and setting strict limits on money printing to cover the fiscal deficit. The Charter is, in effect, the mother law that defines how the Central Bank operates: from reserve management to financial system regulation. The last major modification was in 2012, during the Kirchner administration, and expanded the entity’s powers to intervene in the economy. Now the libertarian administration wants to turn it 180 degrees.
Economist Agustina Medrano explained that the Charter is much more than a set of rules: it is the guide that determines how decisions that ultimately impact the pockets of all Argentines are made. According to her, the Central Bank not only manages the amount of money in circulation and interest rates but also seeks to preserve economic stability in a broad sense. Therefore, she believes that limiting its mission solely to fighting inflation could be a mistake. «If the only objective becomes currency stability, the Central Bank would lose tools to intervene in other important aspects, such as economic growth, financial stability, or the labor market,» she warned.
On the opposite side is Agustín Etchebarne, director of the Fundación Libertad y Progreso, who believes that precisely this change is essential. For the economist, the Central Bank should have a single mandate: to protect the value of the currency, preventing successive governments from using monetary policy to finance public spending. One of the most important changes would be related to so-called temporary advances, the mechanism through which the BCRA can lend money to the Treasury within certain legal limits. Etchebarne believes that this system should practically disappear. According to him, current legislation allows transfers equivalent to a percentage of the monetary base and state revenues, something that, in his view, ends up becoming an open door to print pesos and fuel inflation.
Medrano agrees that financing the deficit through money printing generates problems, although she makes an important distinction. For her, the issue is not that the Central Bank obtains profits from its financial operations, but that these resources end up being used to cover the government’s deficit. «Printing money to finance spending that exceeds income is what ultimately generates inflation,» she summarized.
Another central point of the reform aims to strengthen the Central Bank’s autonomy. The idea is that the entity’s authorities have greater stability in their positions and do not change every time the government’s political orientation changes. Etchebarne argues that this independence must also be accompanied by controls. In this regard, he proposes maintaining the obligation to report to Congress, publish economic information, and retain the functions of banking regulation and international reserve management. «Independence does not mean lack of controls, but clear rules, defined objectives, and transparency,» he argues.
To design the reform, the government took as a reference the Central Reserve Bank of Peru, considered one of the most independent in Latin America. That entity has a very specific mandate: to preserve monetary stability. In addition, it is prohibited from directly financing the state, except in very limited exceptions. For Etchebarne, that constitutional prohibition was key for Peru to maintain a stable monetary policy and controlled inflation for years. However, he also recognizes that there is a much harder factor to copy. «The true strength of the Peruvian Central Bank was not just the law, but having built credibility over decades by complying with the rules without being pressured by politics,» he noted.
Medrano believes the answer is not so simple. While she acknowledges that the official proposal brings the functioning of the Argentine Central Bank quite close to the Peruvian model, she warns that both countries have very different economies and that a recipe that works in one will not necessarily yield the same results in the other. Furthermore, she argues that having more monetary policy tools can serve as a protection mechanism in crisis situations. However, she also recognizes a historical problem in Argentina: the political use of the Central Bank. According to her, for decades the entity’s tools ended up subordinated to the needs of different governments, which resorted to money printing and other sources of financing to cover fiscal deficits, instead of preserving the monetary authority’s own objectives.
As the government advances with the reform, the debate is already underway. For some, the change will shield the Central Bank from politics and prevent new inflationary crises. For others, it could leave the economy with fewer instruments to face complex scenarios and reduce the capacity to respond to future turbulence. The discussion is just beginning, but one thing is certain: the Central Bank, as we know it, is about to change forever.
para mi milei le pone un freno al bcra asi dejan de imprimir plata como si fueran caramelos los zurdos lloran xq pierden su caja politica chupense esa marxistas de mierda viva la libertad carajo 🇦🇷
Para mí esto huele a entrega total. ¿Atar al BCRA mientras los precios vuelan? Son unos vendepatria que le pasan el manejo al FMI. La emisión es la plata pa’ la gente, no el curro de ellos. Se van a cagar cuando el pueblo se avive, gorillitas.