Thursday, July 25, 2024

Welcome to Latam Insights, your source for the most important cryptocurrency and economic news from Latin America in the past week. In this edition, we cover Argentina’s central bank using Chinese yuan reserves to acquire dollars amidst declining reserves, the Central Bank of Brazil’s ability to manipulate digital real accounts in their CBDC pilot, and the launch of Argentina’s first bitcoin futures contract.

Argentina’s Central Bank Utilizes Chinese Yuan Reserves as Reserves Dwindle

As Argentina’s reserve levels continue to decline, the Central Bank of Argentina has turned to its Chinese yuan reserves to purchase dollars and manage internal operations. The bank is leveraging a portion of the $10 billion Chinese swap line that was extended by government officials in June to make payments to importers.

According to local newspaper La Nacion, the bank experienced a loss of $170 million on July 10 and July 11 due to import payments and dollar purchases. Last week, the central bank’s gross reserves diminished by $580 million, reaching $26 billion. Financial group Aurum Valores estimated a daily loss of $100 million.

Analysts from Portfolio Personal Inversiones expressed their concerns:

“The current reserve level is unprecedented, at least since the late 1980s.”

Approximately half of the available Chinese swap line ($5 billion) is believed to have been utilized, prompting the country to seek a new agreement to expedite disbursements from the International Monetary Fund (IMF).

Central Bank of Brazil Empowered to Manipulate and Freeze Digital Real Accounts in CBDC Pilot

During the upcoming pilot test of the digital real, Brazil’s central bank digital currency (CBDC), the Central Bank of Brazil reportedly possesses the capability to manipulate specific account balances. Pedro Magalhaes, a developer claiming to have reverse-engineered the solidity code of the digital real pilot, revealed that the CBDC’s smart contract enables the issuer to freeze funds in a wallet, block token transfers for a particular account, and issue tokens directly to a digital wallet.

Argentina Witnesses Launch of First Bitcoin Futures Contract

Argentina’s regulated domestic stock exchange, Matba Rofex, introduced the country’s inaugural bitcoin futures product. This futures contract, which employs the Matba Rofex index, permits qualified investors to allocate funds to bitcoin using the local currency without concerns about asset custody.

The issuance of this contract was authorized by the Argentine securities regulator in April. The approval aimed to “adapt to the regulatory challenges imposed by new technologies for the provision of financial products” and “promote the development of new and innovative products.”

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Frequently Asked Questions (FAQs) about Latam Insights, Argentina, Central Bank of Brazil, digital real, bitcoin futures.

What is the current situation with Argentina’s reserves?

The Central Bank of Argentina is facing a decline in its reserves, which has led them to utilize their Chinese yuan reserves to purchase dollars and manage internal operations. This approach is being taken as the reserve levels dwindle.

How much did the Central Bank of Argentina lose recently?

According to reports, the bank lost $170 million on July 10 and July 11 due to import payments and dollar purchases. Over the course of one week, the central bank’s gross reserves diminished by $580 million, reaching $26 billion.

What measures is Argentina taking to address the decline in reserves?

Argentina has tapped into half of the available Chinese swap line, approximately $5 billion, and is now looking to establish a new agreement to accelerate disbursements from the International Monetary Fund (IMF).

Can the Central Bank of Brazil manipulate digital real accounts?

Yes, according to Pedro Magalhaes, a developer who claims to have analyzed the solidity code of the digital real pilot, the Central Bank of Brazil has the ability to manipulate and freeze funds in specific digital real accounts. They can also block the functionality of transferring tokens for a particular account and issue tokens directly to a digital wallet.

What is the significance of the first bitcoin futures contract in Argentina?

The launch of the first bitcoin futures contract in Argentina, facilitated by the regulated domestic stock exchange Matba Rofex, allows qualified investors to invest in bitcoin using the local currency without worrying about the custody of the underlying asset. This move aims to adapt to regulatory challenges and promote the development of new and innovative financial products.

How can I stay updated on crypto and economic developments in Latin America?

To stay informed about the latest cryptocurrency and economic news in Latin America, you can subscribe to the Latam Insights newsletter mentioned in the article.

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