(Bloomberg) -- Argentines are taking their dollar savings out from under the mattress and depositing them into banks in a vote of confidence for President Javier Milei as well as his tax amnesty program.

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In a sign of optimism for Milei, dollar deposits have surged 40% to $19.8 billion since he took office Dec. 10, marking the highest levels since late 2019, according to central bank data. While Argentines are paid in pesos, savings accounts at banks are often denominated in US dollars.

The flow of greenbacks back into the financial system comes as a welcome development for a country that over the years has suffered currency crises due to the lack of foreign reserves in the financial system. It also inches Milei closer to one of his top campaign promises to dollarize the economy, a reality that still looks distant for now in South America’s second-biggest economy.

“The amnesty will accelerate the process of free competition, or coexistence, of currencies,” Economy Minister Luis Caputo said during a streamed podcast Aug. 30. “This is not done for tax-collecting purposes.”

Deposits have risen $5.7 billion since Milei took office — about $1.4 billion of which rushed in after the government’s tax amnesty program went into effect on July 17. Banks have already opened around 100,000 accounts for tax amnesty purposes and estimate a floor of at least $2 billion for it, according to people with direct knowledge.

The law, approved by Congress as a larger package of economic reforms in late June, allows people to declare as much as $100,000 in cash previously kept outside the system without paying any levies. The excess savings will be taxed at 5%, although larger sums can also be declared tax-free if used to invest in bonds, real estate or other exceptions. Argentines will have the chance to declare their dollars until March 2025 —- but must then pay higher taxes on the excess amount.

“This is a very low-cost opportunity for people to buy a car, renovate their home or start generating returns on the dollars that today are stuck in a safety-deposit box,” said Sebastian Dominguez, a public accountant and tax expert in Buenos Aires.

The uptick of deposits is still a fraction of the estimated $204 billion of greenback cash in Argentina, according to a central bank presentation. Deposit levels are also still well short of the peak of roughly $32.5 billion in August 2019 before they plunged during election volatility. Having dollar savings in cash, either in safety deposit boxes, stashed at home or in bank accounts abroad, is a common practice in Argentina because of its frequent financial crises and high taxes.

While the phenomenon is beefing up the central bank’s gross reserves, the institution’s liabilities remain greater than its assets. Net reserves stand at negative levels of around $6 billion, according to the local brokerage PPI.

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