By Dr. Susana Nudelsman
Central Bank of Argentina (Banco Central de la República Argentina)
(Source: Wikimedia Commons)
In October of this year, the United States Treasury Secretary Scott Bessent ratified the signing of a US$20 billion currency swap with the Central Bank of Argentina as part of an “economic stabilization agreement” (Buenos Aires Herald, 2025). Moreover, the U.S. Treasury announced its intention to provide an additional US$20 billion to the country (La Nación, 2025).
According to the Argentine banking institution, this agreement seeks to contribute to the country’s macroeconomic stability, emphasizing the need to preserve price stability and promote sustainable economic growth. The swap operations will enable the Central Bank of Argentina “to expand its set of monetary and exchange rate policy instruments, including the liquidity of its international reserves”, in line with the regulatory functions outlined in its statutes. The agreement is an important factor of a far-reaching approach that aims to strengthen the country’s monetary policy and improve the Bank’s ability to cope with events of volatility in the foreign exchange and capital market (Central Bank of Argentina, 2025).
Why is Argentina interested in this agreement?
Peterson Institute Professor Maurice Obstfeld (2025) highlights Milei’s remarkable success in lowering inflation, achieving a federal budget surplus, and relaxing regulations. Prior to the present crisis, the IMF predicted that Argentina’s GDP would expand by 5.5 percent in 2025, after shrinking 1.3 percent in 2024. At the same time, the IMF’s initial assessment of April 2025 concluded that, with one exception, important objectives were met. Indeed, the country’s net foreign exchange reserves, which are primarily in US dollars, fell well short of their target level.
Harvard Professor Ricardo Hausmann (2025) explains that Argentina is trapped in a multiple equilibrium, that is, a situation in which given the same set of conditions, an economy can achieve two or more distinct and stable equilibrium outcomes. If investors are willing to lend money when they feel optimistic, this lowers interest rates helping the economy grow and keeping debt service low, thus confirming the initial expectations. Conversely, if investors become pessimistic, they demand high risk premiums, which causes interest rates to skyrocket, harming investment and making public debt more expensive, thus justifying their fear of a crisis.
For his part, the former Secretary of Finance of Argentina Daniel Marx (2025) underscores that the pre-election portfolio adjustment has been less complicated than in the past, which shows more credibility with banks and institutions. In this regard, financial support from the U.S. Treasury can be useful in creating a sequence that enables its orderly implementation. Hence, the funds obtained to cope with the ongoing problems could be used to address important unresolved issues rather than being used for other instances in which funds are being depleted in the short-term.
Why is the U.S. interested in this agreement?
As Brad Setser (2025), Senior Fellow at the Council on Foreign Relations, argues, Washington has an interest in Milei’s success, not only because of his emphasis on stabilizing the Argentine economy, but also because his commitment to the free-market approach could serve as an important example for the rest of the continent.
However, U.S. interest in the swap agreement should also be understood in terms of the momentous change that the architecture of international financial relations has been experiencing in recent times. Indeed, following various decades of growing global economic integration, the planet is now confronting the threat of policy-driven geo-economic fragmentation.
In this context, Argentina matters for the strategic interest of the United States. Scott Bessent (2025) has emphatically stressed that the country is “a systemically important U.S. ally and that the U.S. Treasury stands ready to do what is needed within its mandate to support Argentina.” In other words, the Trump administration’s bailout resembles Mario Draghi’s support for European stability in 2012 with his “whatever it takes” approach, applied to the Argentine case in 2025.
Vera Bergengruen (2025), a journalist for The Wall Street Journal, believes that Washington’s security policy is a sort of revival of the Monroe doctrine. While the prior doctrine sought to keep European powers out of the region, the current one is primarily focused throughout the Americas with an aim to reward loyalty and to root out enemies. In this respect, Argentinian political analyst Juan Landaburu (2025) points out that in the context of a North American withdrawal from other regions, the so-called “backyard” of the United States is gaining greater importance, but this time not because of European ambitions but because of China’s advances.
- With the results of Argentina’s midterm elections, the government has gained public support for its pro-market approach, while also gaining ground in the international financial community.
- For its part, the United States government welcomes this result, which reaffirms its political preferences and allows it to make projections about its strategic interests in Latin America.
- That said, the swap agreement between the U.S. and Argentina, while not without risks, constitutes an opportunity to renew ties of cooperation in the context of the current complex architecture of international relations. The coin is in the air.
REFERENCES
Bergengruen Vera, 2025, Trump’s ‘Donroe Doctrine’ Aims to Dominate the Americas, The Wall Street Journal, October 22, available at https://archive.is/20251023231723/https://www.wsj.com/world/americas/trumps-donroe-doctrine-aims-to-dominate-the-americas-b31208dd
Bessent Scott, 2025, Argentina is a systemically important U.S. ally in Latin America, and the @US Treasury stands ready to do what is needed within its mandate to support Argentina, available at https://x.com/SecScottBessent/status/1970107351912075454
Buenos Aires Herald, 2025, Scott Bessent confirms Argentina-US currency swap has been signed, available at https://buenosairesherald.com/economics/scott-bessent-confirms-argentina-us-currency-swap-has-been-signed
Central Bank of Argentina (Banco Central de la República Argentina), 2025, The BCRA and the U.S. Department of the Treasury sign a USD 20 billion agreement for exchange rate stabilization, available at https://www.bcra.gob.ar/Pdfs/Noticias/acuerdo-bcra-tesoro-estados-unidos-EN.pdf
Hausmann Ricardo, 2025, Trump Alone Can`t Save Argentina, New York Times, October 15, available at https://www.nytimes.com/2025/10/15/opinion/argentina-milei-trump-bailout.html
La Nación, 2025, Estados Unidos prepara otra ayuda para la Argentina con el sector privado por US 20000 millones, October 16, available at https://www.lanacion.com.ar/estados-unidos/eeuu-prepara-otra-ayuda-para-la-argentina-con-sector-privado-por-us20000-millones-nid16102025/
Landaburu Juan, 2025, Por qué Trump mira a América Latina más que nunca? La Nación, October 25, available at https://www.lanacion.com.ar/el-mundo/por-que-trump-mira-a-america-latina-mas-que-nunca-y-cuales-son-los-riesgos-detras-de-su-estrategia-nid25102025/
Marx Daniel, 2025, De pesos a dólares: esta vez es algo diferente, El Cronista Comercial, October 21, available at https://www.cronista.com/suscripciones/?limit=false&continue=https%3A%2F%2Fwww.cronista.com%2Fcolumnistas%2Fde-pesos-a-dolares-esta-vez-es-algo-diferente%2F&kicker=Opini%C3%B3nExclusivo%20Members&title=De%20pesos%20a%20d%C3%B3lares%3A%20esta%20vez%20es%20algo%20diferente&summary=&image=https%3A%2F%2Fwww.cronista.com%2Ffiles%2Fimage%2F1272%2F1272625%2F68f969cdb980d_600_315!.jpg%3Fs%3D0eec9030d86ead2043d767eb59f61bac%26d%3D1761176231
Obstfeld Maurice, 2025, Argentina’s Credibility Trap, Brookings Institution, available at https://www.piie.com/blogs/realtime-economics/2025/argentinas-credibility-trap
Setser Brad, 2025, Will Trump’s $20 Billion Backing Help Milei Change Argentina’s Fortunes, available at https://www.cfr.org/article/will-trumps-20-billion-backing-help-milei-change-argentinas-fortunes
Susana Nudelsman is a Doctor in Economics focused on international political economy. Counselor at the Argentine Council for International Relations and visiting fellow at CLALS.
