With the devaluation of 40% and the inflation that does not give truce, the exchange rate tension of the dollar, which continues to put pressure on wages. In recent days, after PASSEDThe candidates javier milei and Sergio Massa revived the debate over the call “Bonex Plan”a strategy carried out by the government of Carlos Menem in 1989 which consisted of exchanging time deposits for public securities, in a hyperinflationary context.
This strategy of Bonex plan was carried forward by then Economy Minister Antonio Erman González. This movement implied an indiscriminate placement of public titles. For example, in 1989, 30-day fixed-term deposits were agreed with rates of 400%. Faced with this reality, the government carried out a compulsory exchange of all fixed terms that exceeded one million australes in exchange for bonds (called Bonex 89) under foreign legislation that matured in 1999.
What was the Bonex Plan and Massa’s discussion with Milei
At the same time, the Bonex Plan of 1989 prohibited financial institutions from receiving time deposits until further notice. However, this strategy monetarist generated benefits and consequences: for example, the confiscation reached the 60% of the monetary base, which caused a strong recession due to the drop in liquidity. However, it managed to stop hyperinflation with a “shock” due to a lower demand for goods and services, in addition to the purchase of dollars.
34 years after that episode in the economic life of Argentina, the discussion for the Bonex plan. The person who put the issue on the table was the presidential candidate of La Libertad Avanza, javier mileiwith a campaign proposal that he advanced will carry out if he is elected in October.
Given these comments, the candidate for Union for the Homeland and Minister of Economy, Sergio Massa, went out to the crossroads and aimed at the libertarian. He accused him of preparing a Bonex plan to carry out his dollarization proposal.
“What Milei said is that if he is president there will be a Bonex plan. What he says is that he is going to grab money from savers”questioned Massa this Wednesday in TN.
Furthermore, the candidate UP He pointed out that the liberals “are used to doing it because it is the origin of the 2001 crisis” and they only have one look that “is to see how Excel closes.”
Bonex Plan: is this strategy currently viable?
Apart from the debate on campaign proposals, the market is working with potential crisis scenarios, but a hyperinflationary outbreak or extreme measures such as a Bonex Planthat is, a “cleaning” of the Central Bank’s liabilities through a delivery of long-term bonds to savers, as occurred in December 1989.
for the economist daniel marx“nominal deposits are relatively stable, even in real terms” and explained that “the Central Bank’s debt is at a fixed rate, so the Government would not need to go to a Bonex Plan”.
In contrast, the economist Roberto Cachanosky He did not rule it out and considered it “probable in the event that the flight to the dollar is accentuated” and it is decided “not to issue.”
“I don’t think they mess with the safe deposit boxes but there could be something similar to the Bonex Plan in the event that the flight to the dollar intensifies”predicted in dialogue with Fundación Libertad.
According to the analyst “the implementation of this measure will be marked by the “degree of bullfight” that leads the Central Bank of the Argentine Republic (BCRA) to finance the exchange of Leliqs demanded by private entities.
“In the event that the flight towards the dollar is accentuated, the deposits of the banks are withdrawn and they have to ask the Central for the pesos for the Leliqs, there they will have to issue them and if they issue the pesos it will generate a hyperinflationary flare,” the professor pointed out. And he added: “That is why they are going to have to choose between bankrolling the hyperinflationary flare-up or a Bonex Plan.”
Source: Ambito
