Argentina to reform Central Bank charter, Milei to announce

Argentina's government is preparing to unveil significant reforms to the Central Bank's charter, with President Javier Milei expected to announce the changes personally, potentially through a national broadcast next week. The initiative, developed in collaboration with ministers Federico Sturzenegger and Luis Caputo, and current Central Bank head Santiago Bausili, aims to re-establish the institution's primary mandate: defending the value of the currency.

Key proposals include prohibiting the financing of public spending through the National Treasury, whether via direct purchase of public debt or temporary advances. The reform also seeks to ban the creation of non-transferable Treasury notes. Furthermore, the government intends to strengthen the stability of Central Bank leadership by tightening requirements for removing the president and board members. Officials argue this will provide greater legal certainty and bolster the bank's governance.

Sources indicate that enhancing the Senate's role in validating the appointments of directors is one mechanism being considered to achieve greater institutionalization. President Milei has reportedly discussed this aspect with Senate majority leader Patricia Bullrich. The project also aims to restrict the distribution of Central Bank profits, except under exceptional deflationary circumstances.

Additionally, the reform seeks to impose harsher penalties and sanctions on future authorities who use the Central Bank to finance fiscal deficits through monetary emission. This element is intended to be incorporated into the Penal Code, echoing a previous but unsuccessful attempt by Milei to legislate fiscal and monetary stability with criminal sanctions. The proposed Central Bank charter reform is part of a broader economic strategy that includes fiscal adjustments.