Latam Insights — Argentina's Reserves Bleed, Central Bank of Brazil Would Be Able to Manipulate Digital Real In CBDC Pilot

Welcome to Latam Insights, a compendium of Latin America’s most relevant crypto and economic news during the last week. In this issue, the Argentine central bank sheds yuan for dollars as its reserves bleed, the Central Bank of Brazil would be able to manipulate balances and block digital real accounts, and the first bitcoin futures contract goes live in Argentina.

Argentine Central Bank Sheds Chinese Yuan as Its Reserves Bleed

The Central Bank of Argentina is leveraging its Chinese yuan stash to purchase dollars and manage its internal operations as its reserve level dwindles. The bank is making payments to importers using part of the Chinese swap line that government officials extended to $10 billion in June.

Local newspaper La Nacion reported that the bank lost $170 million on July 10 and July 11 due to the payments the republic had to disburse to importers and the purchase of dollars. The gross reserves of the central bank bled out $580 million last week, reaching $26 billion. Aurum Valores, a financial group, estimated that the central bank lost $100 million per day.

On this, analysts from the local group Portfolio Personal Inversiones stated:

A level of reserves is being tested that has never been observed since at least the late 1980s.

Half the available amount of the Chinese swap line ($5 billion) is said to have been used already, leaving the country trying to organize a new deal to accelerate disbursements from the International Monetary Fund (IMF).

Central Bank of Brazil Would Be Able to Manipulate and Freeze Digital Real Accounts in CBDC Pilot

The Central Bank of Brazil will reportedly be able to manipulate the numbers of specific accounts during the upcoming pilot test of the digital real, the Brazilian central bank digital currency (CBDC).

According to Pedro Magalhaes, a developer that claims to have discovered the solidity code of the digital real pilot using reverse engineering, the functions associated with the Brazilian CBDC smart contract let its issuer freeze the funds in a wallet, block the functionality of transferring tokens for a specific account, and issue tokens directly to a digital wallet.

First Bitcoin Futures Contract Goes Live in Argentina

The first bitcoin futures product in Argentina went live on Thursday, issued by Matba Rofex, a regulated domestic stock exchange. The futures contract uses the Matba Rofex index, allowing qualified investors to put their funds behind bitcoin in local currency without worrying about the custody of the underlying asset.

The issuance of this contract was approved in April by the Argentine securities regulator. At that time, it stated this approval intended “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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