Argentina’s Javier Milei backs away from dollarisation as central bank pick rejects role

Libertarian president-elect signals approach in keeping with ‘market situation’

The man named to lead Argentina’s central bank by libertarian president-elect Javier Milei has turned down the job over policy differences, amid signs that the South American nation’s maverick next leader is backing away from his flagship policy of dollarising the sickly economy.

Emilio Ocampo, an economic history professor and former investment banker, was the leading advocate within Milei’s team of dumping the Argentine peso in favour of the US dollar. The author of a recent paper advocating dollarisation, he had been working on a blueprint to implement the plan after the new government takes office on December 10.

Milei, an admirer of former US president Donald Trump, had said during the election campaign that Ocampo would head the central bank with a mission to close it down, adding as recently as September that dollarising the economy and shutting the bank were “not negotiable”.

But a person close to Ocampo confirmed on Thursday night local news reports that he would no longer accept the post.

“The only reason for Ocampo to be at the [central bank] was to dollarise,” the person said. “He was never going to the central bank to implement someone else’s plan, which he doesn’t agree with.”

Ocampo and Milei’s team declined to comment.

Scrapping the peso, which Milei said in an October interview was worth “less than excrement”, and “blowing up” the central bank were central to the bold plan he pitched during his campaign as a way to revitalise Argentina’s economy, slash triple-digit annual inflation and repair the public finances.

The TV economist has vowed to “take a chainsaw to the state” to balance the budget and has also promised widespread privatisation.

But Milei said in an interview on Wednesday night that while he liked Ocampo’s plan, “we need to see whether the market situation allows a solution like the one Emilio proposes, and whether he is prepared to implement a plan which is not the one he had originally planned”.

Milei’s office said on social media site X on Friday that the closure of the central bank was a “non-negotiable matter” despite “false rumours that have been spread”, without mentioning dollarisation.

Milei has not yet confirmed an alternative pick for central bank chief but local media reports have said Demian Reidel, who served as a vice-president at the institution under then-president Mauricio Macri, is being considered.

The key role of economy minister is another position not yet filled. When discussing possible appointments to the post in his Wednesday interview, Milei praised Luis Caputo, a former head of trading for Latin America at JPMorgan in the 1990s who later worked at Deutsche Bank.

Caputo was finance minister from 2017 to 2018 under the centre-right administration of Macri, who used to describe him as a “Messi of finance”, in reference to Argentina’s star footballer.

While at the ministry Caputo oversaw the issue of a 100-year sovereign bond at the peak of investor enthusiasm for Argentina, an instrument scrapped by the current Peronist government after it defaulted.

He ran the central bank for a few months in 2018 before resigning amid differences with the IMF over the conditions it set for its record-breaking $57bn bailout of the country that year.

Caputo is “a person who is able to do the job, without any doubt”, Milei said. “He has the necessary expertise to sort out the monetary problem and give it a financial market solution.”

Milei stopped short of naming Caputo to the post and local news reports say the former minister has yet to make a final decision on whether to take the job.

Local financial markets are showing increasing signs of stress as Milei works to finalise the key economy portfolios ahead of his inauguration on December 10.

The central bank is struggling to find buyers for short-term peso-denominated debt that it issues to suck local currency out of the system, signalling that its efforts to contain inflation are flagging in the face of market uncertainty.

The dollar was trading at about 1,020 pesos on the black market on Thursday, almost triple the officially fixed rate of 364 to the dollar.

Milei’s biggest challenge is to dismantle an elaborate web of price and currency controls spun by the outgoing Peronist administration without triggering hyperinflation and economic collapse.