Quote from: alyssa85 on November 05, 2019, 08:07:53 PM

The Argentinian Central Bank is now putting restrictions on the purchase of bitcoin:

https://u.today/bitcoin-trading-volume-hits-new-ath-in-argentina-after-central-bank-banned-purchasing-crypto-with

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In order to preserve its foreign exchange reserves, the Central Bank of Argentina (BCA) barred its citizens from buying cryptocurrencies with credit or debit cards on Oct. 31. From now on, cryptocurrency investors are only able to transfer funds from their bank accounts.

To give you an idea of how worthless the Argentinian Peso is, Google says 1 Argentinian Peso = 0.0000018 bitcoin.

Thats right: 1 Argentinian Peso = 180 satoshi.

In my opinion, the prohibition of purchasing cryptocurrency using a credit card is temporary. The government and the central bank take the policy with the aim of:
- Instability of the cryptocurrency market causes the highest risk when allowing the use of credit cards to purchase cryptocurrency. Concern about bad credit. So the bank assumes it's easier for customers to buy cryptocurrency than it is to pay credit card bills.
- The crypto market volatility is very high, banks are afraid that if there is a price decline like last year the debtor's ability to pay their bills also decreases.

While in Argentina itself, the ban on buying bitcoin with a credit card is intended to maintain the country's foreign exchange reserves. Because the purchase of bitcoin with a credit card causes a negative balance in the international trade balance because foreign exchange flows out.

Foreign exchange reserves can be used to maintain the external balance of the value of the peso or in other words to maintain the balance of the exchange rate of the peso against foreign currencies. When a peso depreciates, its foreign exchange reserves can be used to intervene by pouring foreign exchange on the money market so that the peso is appreciated

The government is concerned about the flow of hot money to Argentina. This will be safe when the foreign exchange reserves also increase, this indicates that the inflow of funds held by the monetary authority. The thing to worry about is when a lot of capital comes in but the position of foreign exchange reserves does not increase significantly. If this happens then when capital is run out (reversal of capital) then the peso goes down (depreciation) but due to low foreign exchange reserves, the Central Bank is not able to secure it by intervening so that the peso value can be held back or even rise (appreciation) again.