Posted on 04/19/2002 5:10:28 PM PDT by marshmallow
Argentina has suspended all banking operations and foreign currency transactions indefinitely amid fears of a financial collapse.
"The bank has decided to call a banking and foreign exchange holiday from the close of trade on April 19," Argentina's central bank said in a statement on Friday.
The closedown is aimed at stemming a rush to withdraw funds which threatens to break many of the country's overstretched banks.
Argentina's banking system has lost about 10% of its total deposits since the start of the year, with many savers successfully challenging government-imposed restrictions on withdrawals in court.
Emergency Action
The Argentine Government is expected to use the banking freeze to push through measures aimed at halting the outflow of funds.
The country's legislative assembly is currently considering a bill that would turn most depositors' savings into 10-year government bonds.
The savings for bond-swap would make it harder for savers to have the government's $500-a-month limit on withdrawals legally overturned.
Earlier on Friday, the government ordered Canadian-owned Scotiabank Quilmes, the country's 11th biggest deposit holder, to close for 30 days.
Foreign banks are faced with a choice of bailing out their cash-strapped Argentine units until the crisis is resolved, or exiting the country altogether.
IMF aid sought
Argentine Finance Minister Remes Lenicov is expected to ask the International Monetary Fund for extra aid to resolve the banking crisis at a meeting in Washington this weekend.
But the IMF had indicated that it would not make any extra cash available unless the Argentine Government pushes through an austerity package.
Last year's austerity measures triggered rioting across Argentina
The IMF package would force Argentina to slash thousands of public sector jobs, a move that would impose further economic hardship on the Argentine people.
Argentina's latest economic crisis, which began in earnest late last year after the country missed repayments on its $140bn debt, has been marked by violent street protests.
Earlier this week, the IMF said it expected the Argentine economy to contract by 10-15% this year.
Hair of the dog, baby!!!! ;}
Wow, for the first time I wish that the IMF would bail out the US! :-)
They need to go for the longterm fix instead of the short term one. But it takes someone with leadership abilities, who won't be run out of office or one who won't pander just to stay in office. However, this is difficult, if not impossible, until the system of bribes and payoffs is stopped.
The same situation is on the horizon in Venezuela. I don't see Hugo stepping down. He's ruined the economy, as he's taken over the government and blames his problems on the middle class and the oil company while inciting class warfare. It isn't pretty what's happening and the time is ripe for communism to sweep this whole area.
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