Argentina's elusive quest for remonetization

ARGENTINA - Report 23 Jul 2026 by Joaquin Cottani

The Achilles’ heel of the Argentine economy is the lack of remonetization in pesos. Episodes of solid growth with low inflation over the past 50 years occurred in the 1990s (especially 1991–1997) and the 2000s (especially 2003–2007). In both periods, growth with disinflation rested on a strong rise in real money demand — currency in circulation and bank deposits that in turn supported credit expansion. Current remonetization dynamics, in contrast, are slow. Real broad money demand is 12.5% lower than in 2000 and 30% lower than in 2007 despite real GDP being 60% and 25% higher than in those years, respectively. While persistent 2% monthly inflation is part of the story, the more important factor, in our view, is that devaluation risk is materially higher than in either earlier period.

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