Former Minister of Economy Domingo Cavallo central bank policy applied by its current president, t Guido Sandlerand his predecessor in the office, Federico Sturzenegger.
She personal blog, the former President of the Central Bank also said, "if it strictly adheres to the way in which the announced monetary management is conducted, Sandler will be worse prepared that Sturzeneggers face a exchange rate"
"In both cases, Sturzeneggers from December 2015 to June 2018, like Sandler, from October 1, 2018, almost dogmatic adherence to pure flotationapproved by the IMF in both cases is a source of vulnerability in the event of an exchange crisis, even bigger than fiscal weakness, ”he said.
Cavallo stressed that " Sandlerhow did you handle the exchange rate because the exchange rate surprised you "Non-intervention area", shows that he prefers to intervene very littlein line with the quantitative limits set by the IMF, so that in reality all these artefacts of potential exchange lanes would be nothing more than camouflage pure flotation system ".
But the former minister felt that "it very limited intervention 'to avoid enlargement Monetary Base "is a very bad signal in the future "because in his opinion, if" eExchange rate perforated roof from the non-interference zone currency sale central banks I would be limited quantitative as it seems to be binding on the IMF. "
"In that case, Sandler will do what happened to Sturzenegger intervene in puchitos and do not determine what kind of change is the goalcompleted unable to stop run changes, ”warned Cavallo, who did not rule out a serious political crisis in this economic context.” I am afraid that it will be put on the whole government. I hope it will never happen! "He said.
About Cavallo, " The interest rate is a much stronger instrument fight against inflation rather than quantitative control, "although he believes"efficiency If they were merged, it would change a lot interest rates and indicators money. "
On the other hand, the economist pointed out to attract bank reserves It is much cheaper BCRA to issue LELIQ, and although "usually you can't control both the amount of money and the interest rate"In the case of Argentina"if possiblebecause there is a third monetary policy instrument that is a bank reserve.
He criticized that "the Central Bank is ready pays banks 4 billion dollars a year that monetary policy instruments, monetary base and interest rate are possible. not to focus on the exchange rateThe Monetary Unit Commits "Crass error" without considering "the possibility that. t people choose local money and dollarsor between the dollar and the "leaving economy"very vulnerable to currency exchange"even" more than what was in Sturzenegger ".
LELIQ COSTS: $ 160,000 MILLION ANNUAL
"The The monetary base is not the best guide quantitative in order to influence inflation. My goal is to help prevent the monetary crisis before the elections, ”said the former head of the Treasury. Carlos Menem and Fernando de la Rúa.
"In short, the $ 160 billion economy is likely to be the cost of the bank's profitability, but given the extent to which it is suffer from non-banking, large, medium and small businesses, it does not seem very unfair that some of the victims make the banks, ”added Cavallo in a note published on a personal blog.
He believed that "the definition of a monetary base is not conceptually very adequate." In all banking systems worldwide, including our convertibility, The monetary base is the sum of all monetary liabilities central banks ".
"As overall, Central banks do not issue debts in the form of securities or bonds, The monetary base is the amount of banknotes and coins held by the company (cash flow) as well as bank reserves (bank notes and coins as well as bank deposits of the central bank). Always in local currency, it is understandable, ”he explained.
In this regard, he added: "How Central Bank (Argentina) yes, it publishes public names (formerly LEBAC, now LELIQ), The Monetary Base should include LEBAC and LELIQ stocks as well as remittances with financial institutions.
"The argument that LEBAC and LELIQ are cash liabilities central bank and therefore excluded, not valid. A large part of lace central bank, they are also paid they are remunerated for the cost of attracting deposits banks, ”he said.
He warned that "this problem of defining the monetary base is not just a semantic issue. economic impact on the deficit fiscal. "