Argentina is to tighten
controls on its banking system in a desperate attempt to shore up
financial stability after the announcement of a 29 per cent
devaluation of the peso on Monday. The Argentine authorities announced
on Thursday that the currency markets would reopen on Friday.
In the toughest action yet, dollar fixed term savings accounts are
to be frozen for at least a year. "The banks don't have the money
to meet a massive withdrawal of deposits," said Jorge Remes Lenicov,
The controls will be very unpopular among middle class Argentines
and will further complicate the political challenges facing
President Eduardo Duhalde, who took over earlier this month after popular
protests toppled two previous governments within three weeks. Bank controls
were initially imposed in December as nervous savers withdrew money.
Remes Lenicov said last year's decline in bank deposits of S20 billion
was equal to half the country's national budget.
The new measures convert current and savings accounts to fixed-term
accounts but allow holders of current accounts of less than $10,000 to
convert dollar savings to pesos at the official 1.40 pesos to the dollar
rate, or withdraw $500 a month. Peso savings accounts will be frozen as
well but only until the beginning of March, said Rem Lenicov.
He insisted there would be no "confiscation, trimming', or short-changing"
and said the monthly limit on withdrawals was being increased from 1,000
pesos to 1,500 pesos for workers whose wages are paid into their accounts.
However, Argentina's prolonged bank holiday, which has left banks and
exchange houses open for only limited operations all week means savers
have no clear idea what the local currency is worth.