Argentina: A Central Bank Bond Program Could Face an Uncertain Future

The chief Argentine opposition presidential candidate, Alberto Fernandez, on July 29 reiterated a proposal he first surfaced last week that once in office, he would look at reducing interest payments by the Central Bank of Argentina to local banks that buy short-term bonds and instead use that money to increase pensions. Fernandez characterized the interest rates on Central Bank Liquidity Letters (Leliqs), a mechanism through which the central bank manages the monetary supply, as too high. Opposition presidential candidate Fernandez's proposal to eliminate interest on a type of short-term bond used to manage the monetary supply will stoke inflationary concerns....