[BUENOS AIRES] Argentina's new central bank chief began his first full week on the job by urging the country's private financial institutions to increase lending, the bank said on Monday, as the government tries to jumpstart a stagnant economy.
Alejandro Vanoli was named central bank president on Wednesday when the previous chief monetary policymaker, Juan Carlos Fabrega, quit after a series of run-ins with the economy ministry.
Mr Fabrega favoured higher interest rates as a way of controlling inflation, clocked by private economists at about 40 per cent per year, one of the highest in the world. "They analyzed alternatives for increasing the level of credit, especially for the productive sector and small and medium-sized businesses," the central bank said in a statement after Mr Vanoli held a pair of meetings with executives from the biggest banks doing business in Argentina.
The executives at the meeting included those from local financial institutions, as well as international banks such as JP Morgan Chase & Co and HSBC Holdings Plc. "The head of the central bank told them that the bank will deepen credit-oriented policies in order to increase production and investment," the statement said, adding that Vanoli also stressed the need to comply with foreign exchange policies.
A day before naming Mr Vanoli as central bank chief, President Cristina Fernandez promised to crack down on banks that have used Argentina's stock market to skirt currency controls.
On Friday, the central bank said it was introducing a floor for rates on small, fixed-term deposits to encourage Argentines to save in pesos. It was the first policy move by the bank after Mr Vanoli took over.
Mr Vanoli is known for his disapproval of black market currency trading that has flourished since the government imposed capital controls in 2012, cutting off easy access to dollars.
Argentines, who have seen the value of the peso destroyed again and again by devaluation or inflation in past decades, like to save in greenbacks, particularly in times of crisis.
The economy has been on alert since the government defaulted on its international bonds in July.
The bank said it was setting a floor of around 23 per cent for interest rates on savers' fixed-term deposits. Until Friday, banks had been free to decide those rates. - Reuters