By Marcelo Zlotogwiazda
The economy has no banking
The economy has no banking
the past seven years the economy grew much, there was a strong building employment decreased poverty and destitution, has increased exports and the Central Bank accumulated huge amount of reserves, among many other accomplishments. But there are two key economic variables that have recovered very little: the level of deposits and, consequently, the lending capacity of the banking system.
In late 2002, after the confiscation of deposits in dollars, time deposits in pesos were private by a minimum of 19,000 million pesos, which amounted to nothing more than the 5.5 percent Gross Domestic Product at the time. While from 2003 again this year to grow to 8 percent of GDP thereafter remained around that very small percentage. Now there are time deposits of private clients around 90,000 million pesos, 7.5 percent of what the economy produces in a year.
Considering the total of private deposits (210,000 million pesos), and not just fixed-term (90,000 million), representing a proportion of GDP by 17 percent, third in Brazil and a quarter of that in Chile.
Obviously, the level of credit in Argentina is consistent with the low lending capacity that comes from deposits. The total credit to private sector (households and firms) represented 12 percent of what the economy produces, while Brazil is the triple in Chile five times.
is indisputable that these very unfavorable comparative results have something to do with the two great frauds suffered by depositors Bonex Plan in late 1989 and the confiscation of 2002. But I spent more than seven years without evidence of significant improvement.
The situation could be worse if one considers that for some time the performance of fixed-term deposits does not cover the rising cost of living. Currently, the interest rate for loans of large sums just over 10 percent per year, ie just enough to cover about half of projected inflation. However, although the actual rate is no, the money deposited by the private term does not decrease but comes up: now there are approximately 90,000 million pesos, representing a 30 percent higher than in December 2008 (a rise in absolute terms and in relation to GDP ratio is maintained).
One explanation for this behavior is that the dollar-the other alternative is available a typical depositor, has paid even lower than the interest rate. The U.S. currency rose to over 2009 less than 10 percent so far in 2010 rose no more than 3.5 percent, and nothing indicates that in the short term going to stick a few jumps.
On the contrary, and rub with reserves of 50,000 million dollars (though in recent months more than 2,000 million used to pay external debt to international organizations and private holders) and an estimated surplus of trade balance of this year not less than 10,000 million dollars (in the first five months of the year saw a positive balance of 6,150 million despite the big jump in imports), seem to be ripe for the Government to continue using the exchange rate as an anchor to prevent inflation from accelerating.
In this sense, it is crystallizing a little virtuous interdependent relationship between inflation and the dollar: the price increase erodes the real exchange rate, and simultaneously adjust policy unless the dollar prices is key to curbing inflation.
It follows another possible explanation for the behavior of savers who deposit pesos fixed term. Because the dollar rose less than the rate of interest, the performance of peso deposits measured in dollars has been positive, which encouraged to maintain or even increase their fixed term deposits.
But the fact that the deposits have declined does not mean they have been a preferred option to the dollar. Far from it in recent three years has been a huge portfolio dollarization. It is estimated that the amount of foreign assets outside the domestic financial system (foreign banks in safety deposit boxes, etc..) Are around 170,000 million dollars. Of course the negative real interest rate is not the main reason for the leak. The very limited
gravity of the banking system to attract savings to enable it to offer credit to medium and long term has not been an obstacle to rebuild a profitable business after the carnage of early twentieth century. Since 2005 the private banks are making profits increased almost tenfold, from 650 million pesos to 6,000 million last year. And in the first four months of 2010 have already accumulated benefits 2,070 million, up 27 percent over the same period in 2009.
Given the scarcity of financing medium and long term that is funded with long-term deposits, emerged as an urgent need that the State assume this role with much more conviction and resources than ever before. The announcement of Production Financing Program that allocates 8,000 million pesos from the Central Bank rediscount lending in pesos to five-year term at a fixed rate of 9.9 percent per year, is a step in the right direction. But nothing more than a step in a long way to go.
zlotogwiazda@hotmail.com
In late 2002, after the confiscation of deposits in dollars, time deposits in pesos were private by a minimum of 19,000 million pesos, which amounted to nothing more than the 5.5 percent Gross Domestic Product at the time. While from 2003 again this year to grow to 8 percent of GDP thereafter remained around that very small percentage. Now there are time deposits of private clients around 90,000 million pesos, 7.5 percent of what the economy produces in a year.
Considering the total of private deposits (210,000 million pesos), and not just fixed-term (90,000 million), representing a proportion of GDP by 17 percent, third in Brazil and a quarter of that in Chile.
Obviously, the level of credit in Argentina is consistent with the low lending capacity that comes from deposits. The total credit to private sector (households and firms) represented 12 percent of what the economy produces, while Brazil is the triple in Chile five times.
is indisputable that these very unfavorable comparative results have something to do with the two great frauds suffered by depositors Bonex Plan in late 1989 and the confiscation of 2002. But I spent more than seven years without evidence of significant improvement.
The situation could be worse if one considers that for some time the performance of fixed-term deposits does not cover the rising cost of living. Currently, the interest rate for loans of large sums just over 10 percent per year, ie just enough to cover about half of projected inflation. However, although the actual rate is no, the money deposited by the private term does not decrease but comes up: now there are approximately 90,000 million pesos, representing a 30 percent higher than in December 2008 (a rise in absolute terms and in relation to GDP ratio is maintained).
One explanation for this behavior is that the dollar-the other alternative is available a typical depositor, has paid even lower than the interest rate. The U.S. currency rose to over 2009 less than 10 percent so far in 2010 rose no more than 3.5 percent, and nothing indicates that in the short term going to stick a few jumps.
On the contrary, and rub with reserves of 50,000 million dollars (though in recent months more than 2,000 million used to pay external debt to international organizations and private holders) and an estimated surplus of trade balance of this year not less than 10,000 million dollars (in the first five months of the year saw a positive balance of 6,150 million despite the big jump in imports), seem to be ripe for the Government to continue using the exchange rate as an anchor to prevent inflation from accelerating.
In this sense, it is crystallizing a little virtuous interdependent relationship between inflation and the dollar: the price increase erodes the real exchange rate, and simultaneously adjust policy unless the dollar prices is key to curbing inflation.
It follows another possible explanation for the behavior of savers who deposit pesos fixed term. Because the dollar rose less than the rate of interest, the performance of peso deposits measured in dollars has been positive, which encouraged to maintain or even increase their fixed term deposits.
But the fact that the deposits have declined does not mean they have been a preferred option to the dollar. Far from it in recent three years has been a huge portfolio dollarization. It is estimated that the amount of foreign assets outside the domestic financial system (foreign banks in safety deposit boxes, etc..) Are around 170,000 million dollars. Of course the negative real interest rate is not the main reason for the leak. The very limited
gravity of the banking system to attract savings to enable it to offer credit to medium and long term has not been an obstacle to rebuild a profitable business after the carnage of early twentieth century. Since 2005 the private banks are making profits increased almost tenfold, from 650 million pesos to 6,000 million last year. And in the first four months of 2010 have already accumulated benefits 2,070 million, up 27 percent over the same period in 2009.
Given the scarcity of financing medium and long term that is funded with long-term deposits, emerged as an urgent need that the State assume this role with much more conviction and resources than ever before. The announcement of Production Financing Program that allocates 8,000 million pesos from the Central Bank rediscount lending in pesos to five-year term at a fixed rate of 9.9 percent per year, is a step in the right direction. But nothing more than a step in a long way to go.
zlotogwiazda@hotmail.com
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