Monetary Base

Monetary base — repeated acceleration under fiscal monetization and nominal instability

Argentina’s monetary base is one of the clearest indicators of underlying monetary conditions, because it captures the most immediate form of central bank money creation. In a context of fiscal dominance, high inflation, and unstable money demand, changes in the monetary base are especially relevant for understanding inflation persistence, nominal rebalancing, and the credibility of monetary policy.

From moderate fluctuations to pre-pandemic acceleration

Between 2018 and 2019, the monetary base exhibits moderate fluctuations, affected by exchange-rate episodes and aggregate-control programs implemented by the central bank. However, toward the end of 2019 a sharp increase emerges, associated with the growing monetization of the fiscal deficit and exchange-rate tensions ahead of the change in administration.

This phase is important because it marks the beginning of a more clearly expansionary regime, in which the monetary base became increasingly linked to the broader financing needs of the public sector and to the weakening of the nominal anchor.

Pandemic surge in 2020

In 2020, a sharp surge in the monetary base is observed, driven by economic support measures during the pandemic, monetary financing of the Treasury, and liquidity expansion aimed at sustaining the financial system. This increase occurred alongside a marked deterioration in money demand, which contributed to accelerating inflation in subsequent months and years.

The 2020 jump represents a clear monetary break: base money no longer expanded merely in response to cyclical liquidity needs, but as part of an emergency macro regime in which issuance became a central policy tool.

Persistent expansion in 2021–2022 and renewed intensification in 2023

During 2021 and 2022, the monetary base continued to expand persistently, although with occasional contractions linked to sterilization operations or reserve-requirement adjustments. Even so, the overall trend remained one of sustained growth, reflecting a framework in which monetary issuance became a recurrent mechanism of public financing.

In 2023, expansion intensified again, particularly in the final quarter, when the monetary base nearly doubled compared to the same period of the previous year. This process coincided with an accelerated inflationary regime and an increased use of interest-bearing instruments that shifted part of liquidity toward central bank liabilities.

Extreme acceleration from 2024 onward

Starting in 2024, an extreme acceleration of the monetary base is observed, driven by sharp nominal adjustments, relative-price realignments, and monetary dynamics unfolding within an inflationary shock. These readings reflect not only active issuance but also the formalization of nominal balances in a regime of very high inflation inertia.

Although expansion continues in 2025, growth rates become somewhat more stable, suggesting an attempt to transition toward a less unanchored monetary framework. Even so, issuance remains high by historical and international standards, indicating that the normalization process is still incomplete.

Structural interpretation

Structurally, the recent trajectory of the monetary base reflects the interaction of fiscal financing pressures, exchange-rate instability, and weakening money demand. In Argentina, base-money dynamics cannot be read in isolation: they are part of a broader nominal regime in which central bank balance-sheet expansion has repeatedly served as a bridge for unresolved fiscal and monetary imbalances.

The key challenge, therefore, is not merely to slow the growth rate from extreme levels, but to rebuild a framework in which base-money expansion becomes compatible with lower inflation, more stable expectations, and less dependence on recurrent nominal adjustment.

Conclusion

Argentina’s monetary base has experienced repeated episodes of strong acceleration, culminating in extremely high nominal growth during the latest inflationary regime. The recent stabilization in growth rates is relevant, but it follows an exceptionally expansionary phase and does not yet imply full normalization.

The path ahead will depend on whether monetary discipline can be sustained alongside fiscal adjustment and stronger nominal credibility. Without that combination, lower growth rates in the monetary base may prove temporary rather than the start of a durable stabilization regime.