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Argentinian Finance

Yesterday we remembered the seventh anniversary of the imposition of the financial corralito in Argentina, action taken by the then Minister of Economia Domingo Cavallo, in order to curb capital flight and the departure of deposits in the financial system. The establishment of the financial playard was the beginning of a succession of events that brought about the resignation of Fernando De la Rua as Argentine President (Cavallo was almost at the same time), and the end of convertibility. At that time, the Government’s chronic fiscal deficit and problems in the current account, coupled with the difficulties that the Government was to access to external financing, began to deteriorate the bases of the model, deterioration that was accelerating as it ran the 2001 and the financial system saw how deposits were fleeing without brake (and also the capital of the country). In the thinking of the Argentines, these facts seem they occurred long ago, but in reality not so long ago. It is that so many things have happened in the Middle, which is very It is difficult to think that the same could occur in a very short time. But in these moments, the memories of those events does not intend to stay in that single, but does reflect on the possibility of a crisis such as that experienced situation could occur in the current context.

It is that multiple factors, not less, that can generate a decisive negative impact to the Argentine economy into crisis there are. From the outside the crisis in international financial markets and the global economic recession, have impacted the Argentina through different channels. But for Argentina, the factors of greatest concern are internal in origin. The positive side of the current Argentine context are its twin surpluses: fiscal and external, although they are being seriously threatened, mainly the latter. If one wants to search for similar situations between what happened in the crisis of 2001 and the current economic scenario, we can mention the draining of deposits in the financial system observed in recent months and a trend toward dollarization of the assets by the savers.