O Former Minister of Economy, Domingo Cavallocriticizes the policy of central bank and further reveals that its goal is "to help prevent a monetary crisis before the elections."
"The monetary base is not the best quantitative guide to influence inflation, my goal is to help prevent a monetary crisis before the elections," said the official, who also emphasized that the monetary policy that Guido Sandleris applied since The Central Bank has a cost of 160 billion pesos annually.
"In sum, the $ 160 billion economy is likely to be at the expense of bank profitability, but considering how large, medium, small and non-bank corporations are suffering, it does not seem very unfair that some sacrifice is also to make banks" , said Cavallo.
The departure of the Treasury Palace during the presidencies of Carlos Menem and Fernando de la Ra noted that "the definition that is being used as a monetary base is not conceptually very adequate in all banking systems in the world, including ours during convertibility, the monetary base is the sum of all monetary liabilities of the Central Bank. "
"As central banks generally do not issue debt in the form of bonds or bonds, the monetary base is the sum of the accounts and currencies held by the public (currency circulation) plus bank reserves (banknotes and coins held by banks) plus deposits of banks in the Central Bank.) Always in local currency, it is understood, "he described in an article published in his personal blog.
"As the central bank issues government bonds (before the LEBACs, now the LELIQs), the monetary base should include the stock of LEBACs and LELIQs, as well as the balance of the operations of the pass with the financial entities," he continued.
And concluded: "The argument that the LEBACs and LELIQs are monetary liabilities paid by the Central Bank and that is why they are excluded, is not valid." Much of the reserve requirements of banks at the Central Bank are also remunerated, in fact they are Pay for the cost of capturing banks' deposits. This problem with the definition of monetary base is not simply a semantic question. Has economic effects on the fiscal deficit"