Key takeaways
- Argentina’s Central Bank has ordered private banks to process salaries in US dollars, expanding financial options.
- This policy targets businesses that generate revenue in dollars, allowing them to formalize previously informal foreign payments.
- Passage of this measure depends largely on workers’ confidence in local banks due to 2001 withdrawal limitations.
The Argentine Central Bank authorizes the payment of salaries in dollars
Argentina is moving towards a multi-currency financial model, with the Central Bank opening the door for employers to pay salaries in US dollars.
On Friday, the central bank published communication “A” 8460 entitled “Savings, salary and special accounts. Adjustments”, asked private banks and financial institutions to incorporate the US dollar as the accepted currency for payroll transactions.
The document emphasizes that these institutions must “include the US dollar as the currency accepted for deposits into the “salary account” provided for in point 2.1 of the consolidated text on savings, salary and special accounts. »
In addition, the bank emphasized that private banks must accept and support deposit and withdrawal operations involving the US dollar to serve customers who take advantage of this new possibility, providing these services free of charge.
The move follows the inclusion of this possibility in the Labor Modernization Law, which previously allowed the payment and collection of salaries in foreign currencies but excluded digital wallets, and follows the presentation of a deregulation bill that also aims to boost the national financial market.
Companies incentivized to take advantage of this opportunity are those receiving dollar payments, including commodity exporters, software development companies, and digital design and marketing companies, among others. Most of these companies already paid their employees in dollars, but did so informally through offshore accounts or other methods.
Companies that do not receive payments in dollars are unlikely to pay in foreign currencies, as the law still limits their access to the official foreign exchange market. However, there is another problem: Argentines’ historical distrust of banking institutions, having faced a formidable limitation on cash withdrawals established in 2001, informally called “corralito”.
The currency of payment must be agreed between the employer and employee, and the adoption of the dollar will depend on the willingness of employees to receive their payments through national banks, choosing to trust the national banking system.
