Foreign Banks and Political Sovereignty: The Case of Argentina

Abstract

This paper analyzes a seldom discussed aspect of Argentina's banking crisis of 2001-2002: the conflict that arose between foreign banks and the national government over the economic policies applied in response to the banking crisis. In particular, the paper will examine the foreign banks' strategy to dollarize the economy and to impede the national government's strategy of pesofication.

Ecologies of Investment: Crisis Histories and Brick Futures in Argentina

“…A similar issue confronts indebted countries in the European Union today because they cannot devalue the euro. See Marshall () for a detailed analysis of convertibility's role in consolidating the influence of international banks and lending organizations in Argentina.…”

El papel de la banca pública en las crisis financieras de Argentina y Uruguay

“…En Argentina, esta posibilidad no se relegó a la discusión académica. Los bancos extranjeros que operaban en el país hicieron promesas explícitas, por medio de campañas publicitarias, de que en la eventualidad de dificultades financieras en Argentina, contarían con el respaldo incondicional de sus casas matrices (Marshall, 2008).…”

“…De un solo golpe, esta medida secó la liquidez bancaria y puso en crisis a todo el sistema de pagos. A partir de ese momento, los bancos extranjeros y el fmi emplearon su plan de dolarización (Marshall, 2008). Bajo los términos de éste, el gobierno adoptaría al dólar como moneda oficial y el sistema bancario quedaría bajo pleno dominio de los bancos extranjeros.…”

Differing Effects of the Global Financial Crisis: Why Mexico Has Been Harder Hit than Other Large Latin American Countries

“…During the Argentine crisis, the foreign banks, backed by the governments of their home countries as well as the World Bank and the IMF, utilised their economic power, increased by the crisis, to cut off the flow of dollars into the country in an attempt to expand their presence in the local market and to impose the dollar as the national currency. Due in large part to the presence of a strong national publicly owned bank, and in spite of the grave crisis provoked in no small part by the foreign‐owned banks operating in the country, the Argentine government was able to resist their offensive (Marshall, 2008).…”

“…The same banks that today dominate Mexico's financial system, when confronting a highly uncertain panorama during the Argentine banking crisis of 2001-2002 protected the interests of their headquarter banks at all costs, abandoning local branches and subsidiaries, completely closing credit lines and increasing earnings through derivative operations in order to repatriate large sums of dollars to their headquarters (Marshall, 2008). Even though similar behaviour has yet to present itself in Mexico, it represents one of the greatest risks to the country's economy in the case of the probable deepening of the financial crisis.…”