The Central Bank of Argentina (BCRA) today came out at the crossroads of the versions that warned about a possible “exchange run“. After the uncertainty that was unleashed by the decision of the entity to force banks to sell their own dollars, the monetary authority stressed this Monday that the decision “have no effect on dollar deposits”, and marked that all dollars of savers “have assets in the same currency that back them“.
The decisions made by the Central Bank last week regarding the exchange position of financial institutions have no effect on dollar deposits in the system or on the assets that back them, explained the Central through a statement.
“All foreign currency deposits have assets in the same currency backing them,” he added. From the entity that presides Miguel Pesce they even remembered that There is a specific regulation with more than 20 years of validity that particularly requires that deposits in dollars be backed by assets in dollars.
Additionally, from the Central they indicated that “financial entities also have record liquidity in dollars and pesos.” And Reconquista 266 sources considered that “the versions that circulated all weekend” had “the deliberate purpose of generating a bullfight.”
This view of the level of liquidity of banks is also shared by economists and analysts from the private sector. “Almost 80% of total deposits in dollars are backed by cash and liquidity from the banks. If we take out the public sector (which is not going to take out its dollars), this number is above 95%. A financial system in You couldn’t get more liquid dollars, “said Juan Ignacio Paolicchi, an economist at Empiria.
Regarding the decision that will make some banks have to sell their own dollars, the Central explained that “banks must have a neutral exchange position”, and added that “precisely deposits, being a liability for entities, must have investment support in that currency. ”
From one entity, meanwhile, they agreed that “the resolution refers only and exclusively to the cash dollars that the banks have above their net worth.” And in that sense they explained “that deposits are not considered part of the banks’ net worth (they are liabilities and assets respectively)”.
In summary, they added, “the measure affects only the banks’ own investment portfolio and does not affect customer deposits.” Finally, they also marked that “the financial system is solid, with high levels of liquidity and well capitalized.”
The measure that generated uncertainty
Last Thursday, the BCRA Board of Directors had decided that since December the Net Global Position in foreign currency of financial entities may not exceed the amount equivalent to 0% of the Computable Equity Liability of the month prior to the corresponding one.
Until then, said position could not exceed the equivalent of 4% of the Computable Equity Liability. Faced with this modification, some entities will have to reduce their position and others may increase it.
The Chronicler-RIPE
