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Argentinian Central Bank Chief Resigns Following President’s Speech

© Sputnik / Sergey Guneev / Go to the photo bankA speech made by Argentina's President Cristina Fernandez is said to have culminated in the resignation of the Governor of the Central Bank, Juan Carlos Fábrega.
A speech made by Argentina's President Cristina Fernandez is said to have culminated in the resignation of the Governor of the Central Bank, Juan Carlos Fábrega. - Sputnik International
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Argentina’s Central Bank Governor Juan Carlos Fábrega resigned from his position Wednesday, a day after a speech by Argentinian President Cristina Fernandez highlighting the country’s economic problems, some of which were said to be connected to the activities of the Central Bank, the Wall Street Journal reported.

MOSCOW, October 2 (RIA Novosti) - Argentina’s Central Bank Governor Juan Carlos Fábrega resigned from his position Wednesday, a day after a speech by Argentinian President Cristina Fernandez highlighting the country’s economic problems, some of which were said to be connected to the activities of the Central Bank, the Wall Street Journal reported.

Speculation is ripe about the causes for Fábrega’s resignation. Bloomberg reported about his history of clashes with President Fernandez and Economic Minister Axel Kicillof over monetary and exchange rate policy. The source also said that the resignation may have come as a result of the President’s criticism of the Bank’s alleged leak of inside information to banks, related to a new policy which would force them to lower their foreign currency holdings.

Deutsche Welle noted that the departure may be related to rising inflation and capital outflow plaguing the Argentinian economy, and due to Fábrega’s favorable attitudes toward negotiating with the hedge funds which challenged the country via a US court to pay them the full value of debts accrued prior to the country’s 2001 default.

The Wall Street Journal noted that the resignation may have been the result of a series of outstanding cases of currency law violations, which in the words of Fernandez “aren’t being dealt with”, which have resulted in “billions of dollars...extracted...from the country.”

The source also cited former Argentinian Central Bank economist Pedro Rabassa, who noted that Fábrega’s resignation was an inevitable result of a failed attempt to sit on two chairs at once by trying to keep “the official exchange rate...strong while [simultaneously] preventing reserves from falling.”

Fábrega, a former head of the state-controlled Banco de la Nacion, held his post as governor of the Central Bank for just under a year; he was appointed after a shuffle initiated by President Fernandez in the country’s economic and banking sectors. His successor, Alejandro Vanoli, the former head of the country’s National Securities Commission, which is responsible for regulating capital markets, will serve as the acting head until he is voted on by the Fernandez-aligned Senate later this month. The governor of the Argentinian Central Bank is responsible for monetary policy, and for monitoring the financial system and currency markets.

The Argentine economy contracted by 2.1 percent this year, facing currency shortages, interest rates of nearly 30 percent, and 40 percent inflation (with a 18 percent devaluation initiated by Fábrega in January of this year).

This summer, a New York judge had ruled in favor of two hedge funds which had taken the country to court after refusing the rescheduling of Argentinian debts amounting to 1.3 billion USD.

The judge also held the country in contempt and blocked its attempts to make interest payments using US banks to the 93 percent of creditors which had agreed to incur losses according to the 2005 and 2010 debt restructuring schemes.

President Fernandez had said in her speech this week that she believed the United States was planning to overthrow her government and possibly even assassinate her, noting that the US is targeting Argentina using “financial and speculative attacks.”

She also accused elements of Argentina’s economic elite of seeking a “return to the past, when Argentina was on its knees begging for money at exorbitant interest rates.”

Commenting on Judge Thomas Griesa’s decision in favor of the hedge funds, Fernandez noted “it’s naïve to think that this is merely the work of a senile judge.”

Speaking at the UN General Assembly last week, Fernandez slammed what she called the “financial terrorism” suffered by Latin American countries, including Argentina. Earlier in the month, 124 countries in the UN General Assembly voted to support Argentina’s proposal to create a new international regulatory framework for sovereign debt restructuring. 11 countries including the United States voted against the proposal.

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