10/04/2024
One day, Argentina's peso could be a thing of the past.
Javier Milei, the victor in last year's presidential race, won the election on a mandate to abolish the country's own currency and replace it with the US dollar - although he has talked less about the idea of late.
In some ways, it's surprising the idea hasn't caught on before. Argentines are reckoned to hold more greenbacks than anywhere outside the US and hoarding them is a way of life for many people.
The move is part of the right-wing libertarian's shock therapy plan aimed at transforming Argentina's economic prospects.
Polls show that 60% of Argentines oppose the idea because it would give too much power to the US central bank, the Federal Reserve.
But like it or not, the dollar already plays such a big part in their economy that to some, the idea feels like a foregone conclusion.
Argentines have traditionally set little store by their own currency, preferring to convert their spare pesos into dollars as soon as they can.
They don't trust financial institutions much either, so they resort to what is locally known as the "colchón bank" - that is, stuffing their dollars under the mattress.
Anecdotal stories abound of people keeping money buried in the garden, hidden in the walls or even secreted in heating systems - occasionally with disastrous consequences if there is an unexpected cold snap and the cash isn't retrieved before it goes up in smoke.
It's a symptom of the country's deep-seated structural economic problems. And like all chronic illnesses, it didn't develop overnight.
To get to the root of the Argentine people's obsession with the US dollar, you have to go back to the dark days of the 1970s and 1980s, when periods of hyperinflation blighted the country's economy.
It's estimated that during the 1980s alone, middle-class Argentines saw their purchasing power shrink by 30%.
Record inflation: Five ways Argentines try to cope
Argentina inflation soars past 100% mark
During that time, uncontrolled price rises eroded the value of wages and made a mockery of savings, to the point where people lost faith in their own currency.
The pesos in their pockets shed their worth so quickly that no-one held on to them for long.
There were basically two ways of keeping up: buying goods in bulk or buying US dollars, because either of those would hold their value better than your original pay packet.
Now Argentina has a cost-of-living problem again, with annual inflation at 115%. This has led to an astonishing rise in the number of people living in poverty, from about a quarter of the population in 2017 to more than 40% now.
You might think that no self-respecting government would want this state of affairs to go on for ever. And you'd be right.
There have been various attempts to restore Argentina's confidence in its currency - either by shoring up its value or merely choking off the supply of dollars. But they have all, ultimately, failed.
The most ambitious effort was the so-called Convertibility Plan launched in 1991. This pegged the peso's value at one-to-one with the dollar.
Previous governments had fuelled inflation by printing money. But this time, it was decreed that every peso issued would be backed by one dollar in the central bank's vaults.
The idea was that by telling people they could swap their pesos for dollars at any time, they would eventually decide that they had no need to.
And for a time, it did the job. But it had other side effects which eventually led to a catastrophic economic meltdown in 2001-02.
Argentina had basically outsourced its economic policy to Washington, by locking itself into a currency regime that gave it no flexibility.
Without going into too much detail, Argentina had also let its public debt get out of control. At the same time, the link to the dollar meant that it suffered from the ups and downs of the US economy.
