Argentine presidential candidate Javier Milei’s proposal to dollarize the economy would be positive for long-term lending in the country where mortgages are largely inaccessible, according to Pierpaolo Barbieri, chief executive officer of fintech company Ualá.
(Bloomberg) — Argentine presidential candidate Javier Milei’s proposal to dollarize the economy would be positive for long-term lending in the country where mortgages are largely inaccessible, according to Pierpaolo Barbieri, chief executive officer of fintech company Ualá.
A dollarization of Argentina’s economy would also likely speed up the country’s shift into digital payments, which has accelerated since the pandemic, Barbieri added. Based in Buenos Aires, fintech Ualá offers a slew of financial services including prepaid cards and lending in Argentina, Mexico and Colombia. In its home country, it also offers investments in mutual funds as well as dollar purchases.
Dollarization “would be actually very positive for the business and I think banks would be able to do longer term lending,” Barbieri said in an interview with Bloomberg TV’s Caroline Hyde and Ed Ludlow. “The opportunity for lending in places like Argentina is huge because only 7% to 8% of people have access to formal credit today. And in a dollarized economy I think that number would go up a lot.”
Barbieri pointed to the limited mortgage lending in a country with inflation running at about 120%.
Read More: Billionaire-Backed Ualá Launches ‘Star Product’ in Mexico
Milei, the leading candidate before the Oct. 22 presidential election, has promised voters he would shift Argentina from pesos to dollars, an economic proposal that mainstream economists in Buenos Aires have derided as unrealistic and risks sending the economy into hyperinflation because of the currency devaluation it would require. Milei has received some outside support for dollarization, including from a former board member at the International Monetary Fund.
Barbieri stopped short of giving his personal opinion on dollarization.
Most of Ualá’s revenue comes from Argentina, where the company expects to break even in the second half of this year, Barbieri said in February. The company has bet big in Mexico this year, securing a bank license after a merger with ABC Capital in Mexico and rolling out a high-yield savings account and credit card.
Ualá already offers some operations in dollars for customers in Argentina, and it pays a portion of employees’ salaries in greenback too.
–With assistance from Manuela Tobias.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.