Milei announces Central Bank reform in national address, aims to curb financing deficit

President Javier Milei addressed the nation to unveil a sweeping reform of Argentina's Central Bank charter, a legislative priority for his administration. The proposed changes aim to fundamentally alter the bank's mandate, restricting its functions to solely preserving the value of the currency. This move seeks to end what the government describes as the "disaster" of the bank's performance since its inception.

The reform explicitly prohibits the Central Bank from financing the national treasury, ending practices like direct purchases of government bonds and temporary advances. It also targets the issuance of non-transferable treasury bills, which the government inherited and has since worked to address through capitalization and sanitation processes.

To bolster the bank's independence from political influence, the reform proposes changes to its governance structure. These include institutional mechanisms designed to provide greater stability for authorities and stricter conditions for removing the president and board members. The project also aims to restrict the distribution of the bank's profits, allowing it only in exceptional circumstances like deflationary scenarios.

Furthermore, the initiative introduces a tougher regime of responsibilities and sanctions for future authorities who might use the Central Bank to finance fiscal deficits through monetary emission. This aspect is slated to be incorporated into the Penal Code, signaling a strong commitment to fiscal discipline and monetary stability.