Savers lost three-quarters of the original amount they had deposited in banks before the Bonex.
The cycles of Argentine economy In the past they had an irregular path and without a long-term plan that stabilizes and guarantees monetary security. Although the problems always revolved around the inflation and the accelerated rise in prices, could not yet be solved at the root.
One of the strategies that were tried to counteract inflation was the Bonex Planimplemented in 1989 during the government of Carlos Menem. This measure had strong consequences for savers attached to some fixed term and the middle class.
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What was the Bonex plan
He Bonex Plan It was an emergency economic measure implemented in a context of hyperinflation and financial crisis. In December 1989, the government of Carlos Menem decided convert fixed-term deposits into government bondsknown as Bonex 89. These bonds had a ten-year term and paid periodic interest. The measure sought to reduce the amount of money in circulation to stop inflation which was seriously affecting the Argentine economy.
The exchange was mandatory and affected all fixed-term deposits over a certain amount. Savers received Bonex instead of their cash deposits, which generated a large controversy and discontent. Although the bonds could be sold on the secondary market, many savers felt harmed because they could not access their money immediately.
The effects of the Bonex plan
The consequences of the Bonex Plan were significant and varied. In the short term, it managed to stop hyperinflation, but at a high social and economic cost. Furthermore, the measure caused a strong recession due to the drop in liquidity, negatively affecting economic activity.
In the long term, the Bonex Plan left a deep mark in the collective memory of Argentines, being remembered as a drastic measure that, although necessary at the time, had adverse effects on the economy and the citizens’ trust.
Source: Ambito
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