argentina: no more dollars

Argentina, Buenos Aires, Banco Central

As of today, no more bank accounts in US dollars exist in Argentina. Ten years of peso-dollar convertibility are officially over.

Any amount up to U$S 5000 could be converted to pesos (pesificado) at the official bank rate of $1.40. That would become $7000 pesos available for withdrawal but with the rules of the corralito still in effect. In other words, regardless of whatever amount was converted to pesos, still only $300 per week can withdrawn. Any amount left in a former dollar bank account that was not pesificado will be placed automatically in a plazo fijo and the rules for extracting that money are as follows:

Amount in plazo fijoFirst available# installments
$1 to $5000Jan 200312
$5001 to $10000Mar 200312
$10001 to $30000Jun 200318
over $30000Jun 200324

Interest rates will be fixed at 2%, a fraction of what they were pre-devaluation. All installments will be paid in pesos, not dollars, at the rate of $1.40 per dollar. The only basic decision made today was whether to pesificar $5000 or not. All dollars will be converted to pesos whether it was today at the request of the account holder or at the time of the first installment payment. There is a general question as to whether the government & banks will honor this agreement when it comes time to pay out the first installments due in January next year. Today’s events were first scheduled for 15 Feb but like almost every other economic measure in the past months, it was delayed due to complications in implementation. The only other way for Argentines to use their money now tied up in the corralón (big corral) is to buy a big ticket item. The government has approved the use of plazo fijo funds to purchase property, a vehicle, or anything that requires a registration, such as a boat. Despite the seriousness of today’s measures, there were few protests and no cacerolazos at night.

One ironic note is that in Europe, today is the last day for national currencies to be accepted in their respective countries. Beginning 01 Mar, only the euro will be accepted in those 12 participating zone nations. Goodbye peseta, goodbye franc, goodbye escudo & goodbye dollar in Argentina. It is the end of an era on both sides of the planet.

[Originally posted in Argentina Experienced, a website I created to document living in Buenos Aires after the 2001 economic crisis. Text has been edited for style. Definitions of econ terms can be found in the glossaryPolitician biographies may help, as well as a summary of recent history & current events.]

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