Former Minister of the Economy Domingo Cavallo brings into question central bank policy applied by its current president, Guido Sandleris, and his predecessor, Federico Sturzenegger.
In his personal blog, also the former president of the Central Bank said that "if he strictly adheres to the announced types of monetary management, Sandleris will be up prepared that Sturzenegger faces a course".
"In both cases, in the case of Sturzenegger between December 2015 and June 2018, as in Sandleris from 1 October 2018 onwards, almost dogmatic adherence to pure flotation, which in both cases has been approved by the IMF, a source of vulnerability in case of crisis of exchange, even higher than the fiscal weakness, "he said.
Cavallo emphasized that in the case Sandleris, the way you deal with stock market intervention since the course broke the pod "non-brokerage area", shows that he prefers to intervene a bit, in line with the quantitative restrictions imposed by the IMF, so in reality, all these skills allegedly exchanging bands, is nothing more than Camouflage Clean Plating System ".
But the former minister considered it "this." very limited intervention ", to avoid spreading monetary base "is a very bad signal for the future "because in his opinion, if" eThe course will break the roof from the area without intervention currency sales Central Bank I would be limited quantitatively, as it appears to be delivered to the IMF. "
"In that case, Sandler will happen to what happened to Sturzenegger intervene in puchitos and do not set the type of change as a goal, Completed I can not stop driving it would have changed, Cavallo warned, which did not rule out a serious political crisis in this economic context it would be put on the entire government, I hope this will never happen!
For Cavala, "The Interest rate is a much more powerful tool to fight inflation rather than quantitative control, "though he believes that"efficiency Much would have changed to be combined interest rates and aggregates Monetary. "
On the other hand, the economist pointed out increase bank reserves that's a lot cheaper for BCRA to issue LELIQ, and though "you can not normally control the amount of money and interest rate"in the case of Argentina"that is possible, because there is a third instrument of monetary policy that is the reserve of banks ".
He criticized that "The Central Bank is ready." pay banks $ 4 billion a year so that two tools of monetary policy, monetary base and interest rates are enabled. Do not focus on the course, Monetary Entity is committed "Crass Error" not taking into consideration the "possibility to be. t people choose between local money and dollars, or between dollars and goods "leaving the economy"very sensitive to currency exchange"even" more than what was in Sturzenegger's time ".
LELIQ COSTS: 160,000 MILLION USD YEARS
"The The monetary base is not the best guide Influence on inflation. My purpose is to prevent the monetary crisis before the election, "said the former head of the treasury during the presidency Carlos Menem and Fernando de la Rúa.
In short, the $ 160 billion economy is likely to be at the expense of banks' profitability, but given how much it is suffer from non-banking, large, medium and small companies, it seems unfair that some of the victims also make up the bank, "Cavallo added in a note posted on a personal blog.
He considered that "the definition used in the Monetary Basis is not conceptually very adequate." In all banking systems in the world, including ours during convertibility, The monetary base is the sum of all monetary liabilities central bank ".
"As generally. Central banks do not issue debts in the form of securities or bonds, Monetary base is the sum of banknotes and coins held by the public (monetary traffic) plus reserves of banks (banknotes and coins held by banks and bank deposits in the Central Bank). Always in the local currency, he understood, he explained.
In that sense, he added: "Like it is Central Bank (Argentina) to issue public titles (former LEBAC, now LELIQ), The monetary base should include stocks of LEBAC and LELIQ, as well as the balance of transaction of transport with financial entities.
"Argument from LEBAC and LELIQ paid monetary obligations The central banks and therefore excluded are not valid. Much of it lace banks in the Central Bank are actually paid they are paid for the cost of catching the deposit banks, "he said.
He warned that "this problem with the definition of a monetary base is not just a semantic question." economic effects on deficit fiscal. "