The Argentine exchange Let’sBit targets DeFi and stablecoin as a good vehicle to escape from the inflation of the Argentine peso. Santos Barrio, CFO of the company, highlights that the DeFi are a great alternative to the conventional banking system. He also comments that it can allow savings in the medium and long term.
In Latin America, and especially in Argentina, accessing financial services can be complicated and expensive. But accessing these services, normally reserved for people with large capitals or professionals, is inaccessible.
One of the problems of the Latin American financial system is that it is not designed for small and medium savers. They have a system with bank interest rates below inflation. Making transfers between different regions has very high costs. What’s more, access to credit for consumption or investment is not possible.
DeFi presents an excellent alternative for Latin America and for Argentines, specifically. It allows anyone to access a financial product regardless of who they are and their nationality.
Compound or Anchor are interesting solutions for Latin Americans. They allow access to products that were previously inaccessible. These products were normally limited to other more developed countries.
DeFi allows people to dodge inflation. But not only that, they allow simple financing without having large capitals or facing bank bureaucracy.
A) Yes, bitcoin or ether are great long-term investment options due to their deflationary nature. For Latin American citizens, stablecoins are one of the best options. We speak, in most cases, of dollars that work on a blockchain, usually in Ethereum. These assets allow you to acquire, exchange and transfer funds quickly and easily.
Barrio highlights that:
“In this way, those who have historically found themselves excluded can begin to protect their savings and plan a long-term financial future, growing their capital based on savings.”.
Central Bank of the Argentine Republic (BCRA) would have problems with reserves
The BCRA in 2019 has an exchange rate structure that requires reserves and capital control to maintain itself. Acquiring the BCRA a certain amount of bitcoin would be a sign of support for cryptocurrencies.
Such action would surely generate great local and industry adoption. Barrio highlights that this adoption “would not have real effects on reserves, the underlying problem is another”. According to Barrio, the only sustainable solution is to liberalize exchange rates and capital controls.
An adoption like El Salvador according to Barrio, would reduce the costs of long-term transactions and thus strengthen the international financial system.
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