Part 7/11:
Initially, traditional dollarization methods might conjure images of the Argentine government taking existing dollars and using them to replace pesos. However, Milei approached the task with caution, learning from Ecuador’s painful inflationary experience post-dollarization. Instead of an abrupt transition, he appeared interested in a more gradual approach that would phase out pesos naturally.
Crucial to this strategy is the Central Bank's current practice of sterilized peso issuance, maintaining a tight grip on inflation. Currently, only newly issued pesos offset rising prices, creating a monetary base that is effectively "frozen." To effectively dollarize, one significant hurdle remained—eliminating the foreign exchange clamp that barricades free access to dollars.