What it looks like when a country doesn’t trust its banks

[toast]

I am no expert on international banking matters, but Argentina wants inflows of USD. Should the government of Argentina convert USD private accounts to pesos, that would halt inflows of USD drastically. Some holders of USD accounts have choices... they can flee Argentina. I don't think the gov't of ARG would make that choice. Can they freeze dollar accounts, and then convert the dollar assets to pesos over a weekend? Are the corrupt politicians exempt from such a dictate? Nobody wants pesos.

 

[Quilombo]

I am no expert on international banking matters, but Argentina wants inflows of USD. Should the government of Argentina convert USD private accounts to pesos, that would halt inflows of USD drastically. Some holders of USD accounts have choices... they can flee Argentina. I don't think the gov't of ARG would make that choice. Can they freeze dollar accounts, and then convert the dollar assets to pesos over a weekend? Are the corrupt politicians exempt from such a dictate? Nobody wants pesos.

That's what they did in 2001 with the Corralito. I think many people are once bitten, twice shy, and I don't blame them.

Also to @Ries point about tax evasion, that's another reason why people who have USD in cash don't want it touching banks because then you have to explain where you got it from.

All this being said, Argentina does have inbound USD, lots of it, look at all the remote tech workers en negro, the underbilling by companies, etc. the issue is nobody trusts the banks and AFIP, and I don't really blame them; one robs you and the other makes different rules for different people (i.e. Maximo K's sweetheart debt payment in cuotas)

 

[Ries]

I am perfectly aware of AFIP asking where money came from- in fact, I had to do that once in the past, and have to do it again now, due to a problem with a bad accountant some years ago.
But AFIP is taxes, and "not trusting" a bank because they follow the law and report to the government is, while common, not really an indicator that the bank will fail soon.
Most Argentines dont have enough money to keep very large sums in the bank.
Most US citizens dont have enough money to keep very large sums in the bank.
56% of US citizens dont have an extra $800 to cover an unexpected bill.
So the idea that the average person, here, there, or anywhere, is not trusting a bank because they dont have deposits in the tens of thousands of dollars- well thats not really relevant.
The elephant in the room here is the artificial exchange rate, coupled with the isolationist import taxes and duties.
This is not a La Campora thing- Macri spent $53 billion paying off dollar denominated debt. This dollar denominated debt, which has been a constant for Argentine governments for literally a century (Ok, earlier, some was Pound denominated, but the principle is the same) is the major reason why the exchange rate is so wacky, and why people demand dollars for real estate sales.
Dropping the Black/Blue FX situation would solve some problems, and create other ones.
Uruguay doesnt have much inflation, or a blue peso. BUT, and its a big BUT- everything in Uruguay costs about triple what it does here.
So, we could have easy access to dollars, and lots of crappy chinese imports, and be able to order on Amazon- but pay triple for everything. And its not like Urugayans get triple the wages.
There is no easy answer to the current economic situation.
But in the last ten years, I have seen banking here get better, easier and cheaper for the average argentine to use daily.
No, its not a place where the tiny wealthy class has huge deposits, but as a functioning part of the economy, without massive bank failures all the time, the banks here are not bad, by world standards.

 

[earlyretirement]

I must admit I didn’t know money counting machines detect fakes too but given that they do then presumably all property lawyer offices have them too?

You have to be VERY careful. Some of the counterfeits are very very good. I once sold an apartment and we counted the money and even used those money counting machines that detect fakes. One single $100 bill passed all tests.

Anyone that goes to a closing of a property sale/purchase in Buenos Aires probably has all dealt with these money counting machines. Typically at the ones that I went to, first it went through a machine and then people would always count it.

One bill I got was actually made with real money but I guess they somehow bleached a $1 bill and reprinted it but it looked exactly genuine. It passed all tests and even had what looked like a water mark on it. It was the best fake bill I ever saw.

 

[sts7049]

Uruguay doesnt have much inflation, or a blue peso. BUT, and its a big BUT- everything in Uruguay costs about triple what it does here.

if you remove the "offical" dollar exchange rate and let the peso value be dictated by the market (so, double the price), and then remove the absurd amount of subsidies the government provides that it can't pay for, then probably uruguay is actually cheaper.

 

[Quilombo]

One bill I got was actually made with real money but I guess they somehow bleached a $1 bill and reprinted it but it looked exactly genuine. It passed all tests and even had what looked like a water mark on it. It was the best fake bill I ever saw.

It could have been a Superdollar, I imagine if they're gonna circulate anywhere it would be here, or other countries that aren't officially dollarized (which results in more cooperation with the Secret Service and Bureau of Engraving and Printing) that have valueless local currency, tons of drug smuggling, and lots of tax evasion.

I used to manage large retail stores and can generally catch fake dollars based on touch alone and would catch them all the time, people forget that dollars are a cotton/linen blend, and should feel closer to jeans than printer paper. Before selling my laptop here to another BA Expats member it was a disaster, tons of obvious scammers using fake USD so I got to the point where I straight up told people "I'm American, if you have fake USD I can tell just by touching it, don't waste your time" and they would cancel planned meetups.

Still, an Argentine woman tried to pay me with fake 100s when we met up at a Starbucks. She brought the pen too and I was like, um, okay, cool, but these feel fake, and as soon as I looked, they were, and I showed her how I could tell because she swore they were real (smeared ink, Franklin's watermark looked like he was Asian, illegible microprinting, and finally a series year I never recalled seeing, 2008, which doesn't exist). Her acting was bad too, she didn't even seem upset they were fake.

That being said, it's tough because you either have people who are trying to scam you, or people who are unfamiliar with US currency and don't know it's fake. Every so often you see articles in La Nación of the PFA catching people with tons of fake USD. My guess is they cross someone connected and that starts an investigation, while the average Joe is left to luck and being diligent.

 

[Reply Guy]

I am no expert on international banking matters, but Argentina wants inflows of USD. Should the government of Argentina convert USD private accounts to pesos, that would halt inflows of USD drastically. Some holders of USD accounts have choices... they can flee Argentina. I don't think the gov't of ARG would make that choice. Can they freeze dollar accounts, and then convert the dollar assets to pesos over a weekend? Are the corrupt politicians exempt from such a dictate? Nobody wants pesos.

As @Quilombo said, this has already happened once. Why risk it again?

To you point that some holders of USD accounts have choices, I would say that is a very small amount. Most of the private USD holdings are businesses that need dollars in accounts in Argentina.

Corrupt politicians don't have dollar accounts in Argentine banks. It's stashed abroad.

 

[Reply Guy]

I am perfectly aware of AFIP asking where money came from- in fact, I had to do that once in the past, and have to do it again now, due to a problem with a bad accountant some years ago.
But AFIP is taxes, and "not trusting" a bank because they follow the law and report to the government is, while common, not really an indicator that the bank will fail soon.
Most Argentines dont have enough money to keep very large sums in the bank.
Most US citizens dont have enough money to keep very large sums in the bank.
56% of US citizens dont have an extra $800 to cover an unexpected bill.
So the idea that the average person, here, there, or anywhere, is not trusting a bank because they dont have deposits in the tens of thousands of dollars- well thats not really relevant.
The elephant in the room here is the artificial exchange rate, coupled with the isolationist import taxes and duties.
This is not a La Campora thing- Macri spent $53 billion paying off dollar denominated debt. This dollar denominated debt, which has been a constant for Argentine governments for literally a century (Ok, earlier, some was Pound denominated, but the principle is the same) is the major reason why the exchange rate is so wacky, and why people demand dollars for real estate sales.
Dropping the Black/Blue FX situation would solve some problems, and create other ones.
Uruguay doesnt have much inflation, or a blue peso. BUT, and its a big BUT- everything in Uruguay costs about triple what it does here.
So, we could have easy access to dollars, and lots of crappy chinese imports, and be able to order on Amazon- but pay triple for everything. And its not like Urugayans get triple the wages.
There is no easy answer to the current economic situation.
But in the last ten years, I have seen banking here get better, easier and cheaper for the average argentine to use daily.
No, its not a place where the tiny wealthy class has huge deposits, but as a functioning part of the economy, without massive bank failures all the time, the banks here are not bad, by world standards.

First person I've ever found in Argentina, defending their banks

 

[Ries]

if you remove the "offical" dollar exchange rate and let the peso value be dictated by the market (so, double the price), and then remove the absurd amount of subsidies the government provides that it can't pay for, then probably uruguay is actually cheaper.

Have you been there lately? Its not cheaper. Not in pesos, not in dollars, not in Euros.

 

[Ries]

First person I've ever found in Argentina, defending their banks

I have been using Banco Nacion for over ten years. No problems. I have had to switch banks in the USA a couple of years ago, due to crappy service, and incredibly high fees. Its easier to do most things with my bank here, especially online. I can walk to two branches. Your mileage may vary.