Blue Dollar - Over

[Gringoboy]

But if it's your cash, how could it possibly be considered as BCRA reserves if you could withdraw it tomorrow?
Or is it only considered reserves if you commit to the 365 days?
Anyway, who keeps dollars in Argentine banks anyway?

 

[EricLovesBA]

Central Bank of Argentina is the gate keeper for ALL Foreign Currency. Has been like that for quite some time. Have a dollar account, it is calculated into the Central Bank's reserves. That is why they worry about capital flight: depletion of reserves. Not unusual, kind of the norm around the World: control exchange rates.

So - if all dollar accounts, public and private are counted together as the available reserves, is there a breakout statement available to see what reserves are really available to the government, and not actually in private hands being held by the bank?

 

[jackbower]

But if it's your cash, how could it possibly be considered as BCRA reserves if you could withdraw it tomorrow?
Or is it only considered reserves if you commit to the 365 days?
Anyway, who keeps dollars in Argentine banks anyway?

Ever heard of fractional banking? This happens in just about every country to some degree. In the US, you deposit your money in a bank and JP Morgan gets to play monopoly with it. Then when they lose it all through toxic investments, the fed just prints more and give it to them interest free.

Banks are no longer necessary in the 21st century. They exist more for themselves and the governments and corporations they help prop up. Bail outs are old news, get ready for bail ins in the future.

 

[jackbower]

http://www.reuters.c...EA0Q0HV20140127

Just for added emphasis. This is from today's BUBA report clarifying their position with respect to " bail ins ". They are about to become the norm in Europe. Looks like its not just an Argentinian thing anymore. And just to be clear, its not the government stealing your deposits, no no. Its your patriotic duty to bail out your government and the shyster bankers from here on out. Yay banks!!!

"(A capital levy) corresponds to the principle of national responsibility, according to which tax payers are responsible for their government's obligations before solidarity of other states is required," the Bundesbank said in its monthly report.

 

[dennisr]

So - if all dollar accounts, public and private are counted together as the available reserves, is there a breakout statement available to see what reserves are really available to the government, and not actually in private hands being held by the bank?

LOL, remember, in theory and in most of the world, a central bank is suppose to be independent, beyond the influence of politicians and sovereign debt: CB is not responsible for a country's debt. Consequently, its balance sheet will not indicate any debt. A country's treasury is responsible for debt and servicing that debt, not the central bank.There was quite a deal about it a few years back. Central bank president refused to transfer reserves to treasury and they fired him: independence lost. Independence of the Central Bank in Argentina is one of the big arguments in the Vulture fund litigation. Argentina wants it both ways: CB reserves off limits in litigation.

 

[sleazemerchant]

LOL, remember, in theory and in most of the world, a central bank is suppose to be independent, beyond the influence of politicians and sovereign debt: CB is not responsible for a country's debt. Consequently, its balance sheet will not indicate any debt. A country's treasury is responsible for debt and servicing that debt, not the central bank.There was quite a deal about it a few years back. Central bank president refused to transfer reserves to treasury and they fired him: independence lost. Independence of the Central Bank in Argentina is one of the big arguments in the Vulture fund litigation. Argentina wants it both ways: CB reserves off limits in litigation.

This is a notable point you make here that is extremely relevant to what has caused the plummeting of the BCRA's claimed reserves over the past four years. Until Martin Redrado was shit canned in January 2010 the BCRA's claimed reserves grew steadily and the BCRA was a legitimate independent central bank. Instead of running "dual surpluses" in order to have money to service the external debt (as had been policy) the K's preferred to spend like drunken sailors; the K's wanted to start raiding the BCRA to pay the debt. Redrado refused to allow it, he was subsequently fired and the BCRA's charter was changed to allow the treasury to raid it's reserves at will. You have seen the results.

 

[Gringoboy]

Thanks, these posts answer many questions for economics dullards like me.
Maybe this explains why the Bank of England was made politically independent in 1997 when Blair came to power in the UK.
http://news.bbc.co.u...000/3806313.stm

 

[Vermonter]

Bloomberg presents an insightful op-ed on Argentina's current economic position that anyone with a limited economic understanding could follow. It's worth a look, even if some of the ideas it presents are probably wishful thinking.

http://www.bloomberg.com/news/2014-01-27/argentina-learns-limits-of-opportunism.html

 

[EdRooney]

Lamb chops just made the big time. Our chances of his deiging to join us for a pint are evaporating like BCRA reserves.

 

[Jaredberryman]

Can someone with better knowledge than I explain this from la nacion (Spanish: http://www.lanacion....-del-nuevo-cepo)

- Tratan de revertir la fortísima caída de depósitos en dólares causada desde que se instauró el cepo cambiario. Los depósitos además figuran como reservas. De modo que el sistema funcionaría así: Alguien destina parte de sus ingresos pesos a comprar dólares en la versión más barata y los deja en el banco. Así el Central no habrá vendido dólares, que seguirán figurando como reservas. Y habrá absorbido pesos, que no presionarán sobre los precios.. Habrá que ver si funciona.

Which says roughly: They are trying to revert the very hard fall in deposits in dollars caused by the cepo cambiario. The deposits are also listed as reserves, which means the system would function like this: Someone spends part of their income in pesos to buy dolars at the cheapest rate and leaves them in the bank [referring to avoiding the 20% tax if they leave them in the bank for 365 days]. So the Central won't have sold dolars, they will continue to figure as reserves. And it will have absorbed pesos, which puts no pressure on prices... it remains to be seen if it will work.


SO: -- What I want clarification on is how do dollars that people purchase and supposedly send to their own personal accounts still figure as a part of the Central's reserves? Are personal accounts in dollars calculated as part of the reserves, or are they saying that rather than have the dollars in your own bank account they will stay at the Central until the 365 day period has passed (or until you ask to withdraw and pay the 20% tax)? If the dollars are going to stay at the Central and not be deposited in individual accounts, why would anyone trust this proposal anymore than purchasing a CEDIN (and we know how successful that was).

Basically, from what I understand (my wife explained this), you do not get to buy dollars at the official rate unless you leave those dollars into a savings account for an entire year. Only after a year will you be able to withdraw them. If you ask to withdraw before that period, you will have to pay a 20 percent tax. Meanwhile, that money will continue to stay right where it is, other than electronically figuring as being in your account. Basically, this assures the government that they won't be paying anybody dollars at the official rate for a year. The next person that comes into office will have to do that. Meanwhile, those dollars that people request are counted as reserves by the government because they did not truly pay it out.

I doubt you can actually get what you are supposed to in a year...