Why Argentina by Alfredo Roisenzvit

pay attention to this and let's give it up to Alfredo. Please come into stage.

All right. Thank you.

Okay. Thank you. Um, I'm going to try to explain why Argentina can turn a lot of those crisis that we've lived along the years and make it into an opportunity for growth. So there's this very famous uh quote from a Nobel Prize winner Simon Kousnet from the 70s um and he says that there are four kinds of countries in the world developed underdeveloped Japan and Argentina and what he meant by that is that developed countries of course everyone knows underdeveloped everybody knows Japan because no one knows why it's developed and Argentina because no one knows knows why it's underdeveloped. But it wasn't always like like that.

Actually, uh in the start of the uh last century in the 1900 early 1900s, Argentina was a developed country. It was always top five or top 10 in GDP per capita. In 1902, it was double the GDP per capita of Japan. And then as uh we can see in the graph things happened and it started uh shifting especially after the um first and the second world war where Japan developed and Argentina didn't. So this is a very uh intuitive uh information regarding uh what Kousnets was saying in his quote.

Now we can see the same for the other developed countries. We all started around $4,000 in GDP per capita in the early 1900s and then the developed countries continue developing but Argentina cannot stay the same. So we can see the path from the 19 early 1900s until today of what Argentina means in terms of the world rank in GDP per capita and as we see it's declining uh rather continuously. Uh so basically every everyone watching would say what's going on. Uh so we're pretty unique uh in terms of going backwards.

It's probably the only country that started being top five in development in the world and it turned basically now to the back lot of countries being underdeveloped. Uh that's probably the only case in the world. What did we do? Basically make all the wrong calls in the 19 early 1900s. We had basically an oligarchy uh governed by meat exports and a lot of capital info inflows and infrastructure coming in.

Uh between the world wars basically we halted commerce. uh we didn't incorporate any technology and we start falling back in terms of investments and after 1945 all the bad decision making start coming in and basically pick the wrong side declaring war on the winners three days before World War II uh World War II I'm sorry uh was uh was finished uh and we got basically a populist government uh with a very strong anti- capitalist bias uh that killed productivity, killed investment and basically depleted all the capital reserves. So that basically demolished all institutions especially economic institutions. Um that took took us almost to the 1990s. We had there 10 years of a basically of a liberal stance government uh with capital inflows basically and some stability but no profound reforms.

So that lacklon reforms paved the way for the populist government to return and basically for those last 20 years we had a corruptionbased uh populist government. they depleted the rest of the capital and the rest of the institutions and of course they aligned internationally with the wrong bunch. So it was very costly for society in all and in 2025 we started sort of again uh with a very liberal government uh probably the most liberal in Argentine history and one of the most liberal in the world and they're still fighting now trying to cut get and pass some reforms. So basically all these bad calls just killed the Argentine currency in Argentina. anyone that's uh 50 years old or older has lived through three hyperinflations and at least four deposit confiscations.

So uh in 1975 we had a hyperinflation with more than 50% a month inflation. In 1989 we had 124 124% a month. It turned out to be 2600 annual inflation. In 2023, we had a 25% an uh inflation in the month of December annualized projection with 1,425%. And also in 85, 90, 2001, 2002 and 2008 we have basically deposit and private sector confiscation from the government that took all the deposits and also the uh private pensions uh funds.

So it's very difficult to construct any growth against that mostly because of fiscal deficits. uh all through the century from the 1900s on all the reds all the red bars are fiscal deficit years and only those six or eight are the um 90 uh stability period where you have uh a very small fiscal surplus and you see last year is a very very small f fiscal surplus. So basically populist governments what they do is they build on fiscal deficit and they also of course default the sovereign debt. Argentina is the world champion in defaulting sovereign debt. Those are all the instances from 1827 all the way to 2020 where we had or either full or partial defaults and those defaults of course hinder the credibility of the government and the interest rate that the government can finance that deficit.

So if you have hive deficit, you killed your own currency by basically um degrading it and with deposit confiscations and also you kill external financing by defaulting the the external depth. You only the only tool available to finance fiscal deficit is through sovereign currency debasement. meaning you get inflationary tax, right? You you tax the people through inflation. So everybody in Argentina knows that the currency will debase basically forever.

So they reject local currency and government usually bans financial exchange from peso to other ex um international currencies. So, everybody still uses the US dollar. This is a newspaper from 1971 uh declaring that it's a felony to buy US dollars. Actually, this is still in place. It's still considered a felony in Argentina if you buy US dollars outside the regulations.

Uh, of course, no one cares about this and everybody still buys it. So expensive stuff you buy cash in USD and half the economy is basically informal in cash because of all these dynamics. So banks can really participate in economic activity and banks are the main driver for economic growth uh through loans and and deposits. And if you see all through the de all through the last decade, but basically all through its history, Argentina has only had uh an average a little bit over 10% of loans to the private sector. And if you look at any developing developing country, it's between six and eight times more than that.

And of course, an advanced country is 15 times more than that. And also Argentina is the champion of the world in terms of holding US cash because the economy transacts in cash because of what I've explained of all these bad decisions. So basically economics agents have only one exclusive nominal nominal anchor which is the exchange rate between Argentine pesos and dollars. And because of those uh of those all those debasement uh events, economic agents basically reject Argentine peso. So we end up having m multiple exchange rates to the US dollar.

Basically those that are allowed and those that are not allowed but people use anyway. It's very difficult to put a graph or to put numbers into this if you're not from here and if you're not used to the currency being debased basically every year every year of your life. So in 1881 we had our uh our first national bill. As in every other country in the world, banks used to issue bills. Banks used to issue cash and it only got nationalized very um only a few years ago, a few decades ago to be exact.

Argentine was one of the Argentina was one of the first countries to actually enact a central bank and that was um in the late 8 uh in the in the early 1900s but in the 1880 in 1881 we had our first national bill. It was like a centralized national bill and it was worth 1.04 Argentine pesos for each dollar. So it was pretty much one one to the US dollar. So we started one one in 1881 and then we started changing the currency because of hyperinflations or high inflation.

So uh governments would change the currency um to try to generate um some some sort of trust in the new currency. So we took three zeros in 18 uh in in 1970, three more in ' 83, three more in ' 86, three more in ' 91, and then in uh 2014 we established the peso as the last currency. Uh but since then, we've multiplied that for 1,500. So it was one to one in 2014 actually. uh it was one to one in two thou in 2000 again with the US dollar the one peso$1 until 2000 and since then it's 1,500 now so in the last currency exchange we added 1 1500 times and it's very difficult to manifest in numbers so I did a calculation it's all right there how many one peso bills from 1881 you would need to buy $1 bill, same dollar from 1881 that is still current now.

So even the AI couldn't picture this. But if you fill the Bokeh Junior Stadium with bills, you need to build a tower with one peso bills to want to buy $1 today. And it couldn't get it because a tower needs to be 1500 miles tall. All right. So the IIA I've tried the IIA prompting it.

I'm very good at prompting AI. I've tried prompting it. It couldn't get it. It didn't get it. So, I have to I had to sort of try to make it and it still doesn't work.

But you can imagine it's a 1500 mile high tower of one peso bills that started one to one in 1881 to buy just one US dollar today. Now, if you think, okay, that goes like to the stratosphere. No, you're wrong. and it goes to the exosphere. All right.

So, that's how tall it needs to be and that's how you uh that's how you can get an idea of what it means to debase the currency constantly. So, even with all that going on, we in Argentina are specialists in enduring, in thrive, in inventing, in finding different ways to move forward. Actually, we build we build products. We build stuff. I used the typo purposely.

If anyone knows about hodling, well, we know about building. Uh we are the only underdeveloped country that's uh funded 11 unicorns. And unicorn is a company that's worth more than $1 billion. So, we have Argentine founders of 11 unicorns. That's the only underdeveloped country that gets that gets so many and we are very high in all the rankings in cryptocurrency adoption.

Uh we're were very early on and we're very high in all the rankings and this is basically because we have no institutional currencies and we have no banking system. So we're still building and we keep building stuff around all these problems trying to get technology to use it to use technology. Uh so Ethereum actually built a golden bridge for Argentines to go above all that labyrinth of bad decisions and bad regulation. uh people very early resorted to crypto wallets, stable coins, DeFi and decentralized technology to overcome all these difficulties and Ethereum actually uh technologically allows for mon money 2.0.

It allows us to build better tools to build better money and those are not dependent on on a government. You can do it decentralized. So this gives Argentina and especially Argentines a golden ticket into a more developed economy where you can build tools to get the ability to transact, save, invest and even work remotely integrated into advanced economies and you don't have to tolerate bad policy as much anymore. So we can also we can also build a better economy at home. I'll mention what I'm building with uh of course a group of partners uh and it's a digital pesos stable coin.

It's USDC but actually peso denominated. We have a stand here in the D5 district. Please come by and say hi. But basically what you do is you sign up, you send fiat pesos to a digital bank to a um digital bank account number that we issue and 15 seconds later you have deep digital pesos on the blockchain, the same amount, no fees. Uh and this basically allows of course 24/7 payments transactions and also it allows the ar the the most late Argentine sport which is buying USD and you can buy USD via USDC, USDT or any other US stable coin frictionless and free of any regulations or limitations or even banking hours.

So we have like a lot of use cases like every other every other stable coin B2B payments actually treasury management of course points of sales and of course on boarding and um bridges and also uh on and off ramping very efficient for into Argentina and out of Argentina. So anyone running a business that needs on and off ramping come and see us we can talk to you. So even after all the bad that I talked about what we've done or actually other people have done with our institutions after this week if you come from abroad you will have met the friendliest people. You you will have eaten the best meat ever. You will have drunk the best wine.

You will have been greeted by the greatest hosts to guests in the world. We love having guests. We're great hosts. We're very heartwarming. You will have lived with our passion and of course you will want to come back for sure.

Hopefully we will be in a much better position. So here we stand once more looking for actually the way to make it. We're very used to it. As more Argentines lend their way to this liberating technology that we see in Ethereum, we will build of course a better future, a better future for ourselves with these great tools. Thank you very much.

Thank you so much. And yes, um I just want to recap a little bit about it. So we have more um seeing all the crisis and if you are not from Argentina and if you're not from the time and you're from another country continent now you know a little bit more about the history and the problems and the crisis and how blockchain is trying to help solve this problem. And I want to give a shout out also to our audience live stream. So you can go to the Ethereum Foundation YouTube channel if you want to rewatch again um or you want to learn more about this and watch all our talks so far.

So again I'm going to repeat the Ethereum Foundation YouTube channel. Okay. Now if there is any question please um raise your hand and we will pass you the me the mic. Okay. Yes.

Hola. See Staking the sauce.