Money laundering launched a month ago in Argentina has propelled bank deposits in dollars to their highest level in five years, a phenomenon that will increase lending but is not improving the South American country’s meager monetary reserves for now.
According to official data, since the regulation of money laundering in mid-August and until September 17, bank deposits in dollars increased by about $4 billion.
Thus, foreign currency deposits with financial institutions amounted to 24.561 million dollars, its highest level in five years.
The inflow of dollars into special bank accounts created for money laundering is increasing as the September 30 deadline for declare without penalty up to $100,000.
According to calculations by the Adcap firm, private deposits in dollars have increased by 4.135 million since the regulation of the regime and this figure could reach 5.85 billion by the end of this month.
Although Money laundering affects all types of undeclared assetsThe government largely highlights the 257.857 million dollars that, according to official data, Argentines accumulate outside the local financial system.
These are the “dollars under the mattress”as savings in American currency kept in homes, safes or undeclared foreign accounts are colloquially called in Argentina.
The huge volume of these “dollars under the mattress” is explained by a combination of factors which include traces of distrust of Argentines in the financial system after the crisis of 2001, due to the “corralito” that left the savings of thousands of citizens stuck in the banks.
There are also historical-cultural factors that have consolidated over the years the usual practice of Argentines of buying dollars with the little they can save to protect themselves from the persistent threat and high inflation in Argentinawhere the expression “he who bets on the dollar does not lose” is passed down as a legacy from generation to generation.
and the high tax pressure In Argentina, this also largely explains the hoarding of undeclared dollars.
“Whitewashing is a historic opportunity that everyone benefits from.”“The one who regularizes the benefits because it no longer needs to be hidden and the companies benefit because there will be cheap credit,” stressed last Friday the Minister of Economy, Luis Caputo.
With a larger balance of money to lend, Bank loans in dollars increased by 584 million dollars since mid-August, to 7.202 million.
“It’s very good for the economy. Dollar loans are increasing, but for the moment only for the pre-financing of exports, because the banks are not offering other lines of credit,” Leonardo Piazza, director of the consultancy LP Consulting, told EFE.
The entry of dollars into the system has not yet impacted the level of monetary reserves of the Central BankAccording to official data, gross reserves closed last Friday at 27.263 million dollars, but, according to private calculations, freely available net reserves continue to be negative (-5.5 billion dollars), which represents one of the biggest problems of the Argentine economy.
According to a report by the consultancy firm LCG, even if Dollar bank deposits increasedThis money is temporarily held in cash form in bank branches or treasuries for operational reasons, specifying the reserves of the Central Bank for only $168 million since the start of bleaching.
“As of now, banks have not transferred cash deposits to the Central Bank which were made in special accounts for the regularization of assets, keeping them in branches or treasuries. However, we understand that it is only a matter of time before gross reserves (and not net) can increase by around 2.8 billion in the coming weeks,” noted LCG.
