The head of the BCRA defended the band scheme and stressed that “there is an enormous demand for coverage that is out of proportion. Let’s hope it is reversed after October 26.”
Following the announcement by the US Secretary of the Treasury, Scott Bessentthat the bailout would reach US$40,000 million, The economic team made its first public appearance and the head of the Central Bank (BCRA), Santiago Bausiliassured: “We have already reached, conceptually, an agreement on the framework”in reference to the swap that will be for US$20,000 million, although he avoided giving details about the conversations. Regarding the date on which the financial aid would arrive, he could not give specific dates.
“We have been working for the last two weeks to complete the paperwork and We would hope that very soon we will be able to execute the framework and the agreement that will contain the swap”said Bausili at the think tank The Atlantic Council. When asked about the possibility of it arriving within the next two weeks, he replied: “We hope so.”
Regarding the swap, specifically, the official highlighted: “It is a facility that we achieved within a scheme that we hope to execute soon. The swap is a type of liquidity provision facility to a country as happened with Mexico in the 90s and that we seek to update.”
Bausili’s words about the swap came just 11 days before the midterm elections on October 26, a litmus test for the libertarian administration of Javier Mileiso he hopes that the Treasury financing instrument can be activated before the elections.
Even so, the news this Wednesday were the US$20,000 million additional loans that are being negotiated with private banks and sovereign wealth funds.
Bausili on the band scheme
Regarding the exchange rate scheme of floating bands, the head of the BCRA stressed that “they are very wide” and that they are getting wider every month. “Eventually they will move so much that the price of the dollar will reflect the market price. We are satisfied with the calibration of the bands, they make sense”, he confided.
“There is a huge demand for coverage that is out of proportion. Hopefully it will be reversed after October 26,” the official emphasized. Although he stressed that this is a “political shock”, so “we do not believe that we should recalibrate the entire program or the band system in this context.”
“After the elections the shock will have passed. We reaffirm and do not anticipate any changes in the band system and regime changes“, insisted the official.
Regarding the expected accumulation of reserves, he stated that they imply that “pesos and We must ensure that these pesos that are issued go into the hands of someone who demands them and the balance is not altered.“.
Source: Ambito
