Unprecedented Economic Shake-Up: Banks Transfer Central Bank Debt to Treasury and Private Institutions Respond in Drops
The second phase of the economic plan began with a significant move by the banks, following the announcement last Friday of the plan to transfer the Central Bank’s debt to the Treasury. Private financial institutions reacted by getting rid of part of the passive repos and the stock of the Central Bank’s debt issued. This resulted in a nearly 30% drop in the stock in a single day, an unusually large decrease.
The passes, remunerated liabilities that Javier Milei and Luis Caputo aim to eliminate to lift restrictions, are securities used by the BCRA to absorb monetary surplus. Banks buy these securities to earn a return on savers’ deposits. The Minister of Economy announced on Friday that they would hasten the transfer of passes to the Treasury by issuing new Treasury bills (Leremo), informing the banks on Monday.
Market reactions on Monday led to the rise of financial dollars, and a decline in stocks and bonds. The stock of passes decreased from $16 billion to $11 billion, attributed to the dismantling of public and private banks. The Central Bank explained the drop as normal movements at the start of the month to meet needs, while banks awaited new debt instruments from the Treasury.
Banks are negotiating with
