Hanke urged dollarization, but Milei's new bill contains no dollarization

The number Steve Hanke cites is powerful. Argentina ended 2009 at 3.80 pesos to the dollar; comparing that with levels around 1,800 today implies that roughly 99.8% of the peso's dollar value has disappeared. Hanke uses that loss to urge President Javier Milei to fulfill the dollarization promise from his 2023 campaign. Dollarization replaces the local currency with the dollar and removes the central bank's discretion to create money. It can shut down deficit financing through the printing press, but it also gives up the ability to set interest rates and money supply for domestic conditions. Hanke, a Cato Institute senior fellow, has advocated currency boards and dollarization for decades. The prescription in this post is a long-held position, not a new reaction.

What changed since 2009

Argentina's central bank still operates a peso exchange-rate band in August 2026. For August 7, the floor is 750.88 and the ceiling is 1,852.73 pesos per dollar. Those are intervention boundaries, not the day's closing market rate. The 99.8% figure captures the scale of long-run value destruction, but it is not a precise quotation for that day's market.

Same problem, opposite institutions

The bill Milei announced on July 30 does not abolish the central bank. It prohibits the bank from directly or indirectly financing the Treasury and changes appointment, tenure, and removal rules to shield officials from political pressure. If Congress approves it, the institution that issues pesos survives, but using it to cover fiscal deficits becomes harder.

Both target political money creation, but the institutions point in opposite directions. One imports discipline by surrendering monetary sovereignty; the other keeps a domestic institution and tries to bind it by law. Ordinary legislation can be reversed by a future majority, while dollarization leaves no domestic lender of last resort when dollars are scarce.

The path still standing on November 9

Milei has a reason to try the smaller institutional change first. The median forecast in the central bank's survey puts end-2026 inflation at 29.8%, far below the 211% recorded in 2023. As inflation falls, the government has more room to test constraints on the central bank before performing the larger surgery of replacing the currency.

The test for Hanke's demand is whether the government publishes a bill or dated official roadmap to replace the peso within the next three months. Without one, Milei's campaign promise is not necessarily dead, but the operating path is clearly central-bank reform and an exchange-rate band.