The Return of the “One-to-One”: Economic Stability or Risky Déjà Vu?
The “ghost of the one-to-one” has resurfaced in Argentina’s economic debate as President Javier Milei reportedly prepares a new plan de convertibilidad similar to the one that defined the 1990s. The proposal, revealed by economist Antonio Aracre on C5N, has reignited intense discussions across financial and political circles.
According to Aracre, the plan convertibilidad Milei would be unveiled following an upcoming meeting between Milei and U.S. President Donald Trump, signaling a strategic alignment between Buenos Aires and Washington. The reported plan would be supported by a $20 billion U.S. financial package, aimed at stabilizing Argentina’s volatile currency and anchoring the peso to the dollar once again.
“The Argentines are in a position to dream again of the stability of the ‘90s,” said Aracre, who described the initiative as a potential game-changer for inflation control.
What Was the Original Convertibility Plan?
Implemented on April 1, 1991, under President Carlos Menem and then-Economy Minister Domingo Cavallo, the Law of Convertibility (No. 23.928) pegged the Argentine peso to the U.S. dollar at a fixed one-to-one rate.
The Banco Central de la República Argentina (BCRA) could only issue pesos backed by equivalent reserves in dollars, functioning as a “currency board.” Initially, the model worked: inflation plummeted, consumer confidence soared, and Argentina experienced a short-lived period of economic stability and prosperity.
By 1995, the stability narrative helped Menem secure re-election, as the convertibility plan curbed hyperinflation and brought predictability to daily life.
The Downside: Debt, Deindustrialization, and the 2001 Collapse
Despite its initial success, the convertibilidad Milei-style system of the 1990s came at a steep price. The strong peso and full trade liberalization decimated domestic manufacturing, pushing unemployment from 8% to over 18% by 1995.
With no monetary flexibility, Argentina relied heavily on foreign debt and privatization to finance its deficit. The debt ballooned from $61 billion in 1991 to over $140 billion by 2001.
When neighboring countries like Brazil devalued their currencies, Argentina became uncompetitive, leading to a deep recession that culminated in the 2001 financial collapse, the “corralito,” and the resignation of President Fernando de la Rúa.
The Milei Proposal: A Modernized Convertibility for 2025
Supporters of the plan de convertibilidad Milei argue that today’s global financial environment, coupled with potential U.S. backing, could allow Argentina to implement a smarter, hybrid version of the old system.
Economist Aracre claims the new model would be “digital and flexible,” integrating blockchain-based reserves and partial dollarization mechanisms to preserve monetary sovereignty while ensuring fiscal discipline.
In essence, Milei’s plan seeks to restore the peso’s credibility without fully surrendering monetary control. The swap line with Washington, worth $20 billion, would act as a guarantee for debt payments and exchange rate stabilization over the next two years.
However, critics warn that such a plan could trap Argentina in another debt spiral, especially if global interest rates rise or exports fail to grow. Journalist Pablo Ladaga cautioned, “The convertibility did great damage — to sustain it, Menem sold everything.”
Debate Divides Argentina
The announcement has polarized economists, lawmakers, and ordinary citizens. Supporters view the convertibilidad Milei plan as the only credible path to break hyperinflation and restore investor confidence. Opponents fear it could repeat the errors of the 1990s, prioritizing short-term stability over long-term industrial and social development.
Social media reflects this division — with “#PlanConvertibilidadMilei” trending nationally. Many Argentines express cautious optimism, while others recall the painful memories of layoffs, frozen accounts, and lost savings.
Between Hope and Memory
President Javier Milei, a self-proclaimed libertarian economist, has consistently advocated for monetary discipline and even full dollarization as solutions to Argentina’s chronic inflation. The plan convertibilidad Milei could serve as a political and economic bridge — a temporary fix toward a fully dollarized economy.
Whether this marks a return to the mistakes of the past or a visionary leap forward remains to be seen. What’s certain is that Argentina once again stands at a crossroads, torn between the promise of stability and the lessons of history.
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