News Center

The Central Bank tries to reopen the account to go back to operating in the U.S.
Clarin
January 14, 2010

There was another meeting of the parties. Griesa gave 48 hours to reach an agreement.

by Ismael Berm dez

The Central Bank wants Judge Thomas Griesa to free up the embargoed account because it needs to continue operating in the U.S. And the strategy would pass because they'd lift the embargo or failing to the US$1.7 million would stay frozen with the commitment from the plaintiffs not to place new embargoes on that same account.

This strategy was arisen soon after the meeting that was held in the New York chambers between the lawyers of both parties. There Judge Griesa asked the attorneys for Argentina and the funds to seek an accord in 48 hours.

Concretely, he asked them to "work together on a stipulation that allows the Central Bank of the Argentine Republic to continue using the account it holds at the Federal Reserve."

The BCRA's representatives interpreted this as Griesa not wanting to harm Argentina's banking operations that, logically, would be disrupted if it cannot operate in the United States.

This "optimistic" view about Griesa contrasts against the fundamentals of the decision revealed the day before yesterday which moved on the matter of "alter ego" which argues that the BCRA is an arm of the Treasury, without autonomy which gives immunity throughout the world to its reserves.

The Central Bank's account in the U.S. is "transactional" which is used for funds transfers with corresponding banks and some buy-sell operations in foreign currency.

Because of the lawsuits against Argentina, the Central Bank always sought to have the smallest quantity of funds there and for that it only came to a certain amount, moving the rest to Swiss banks where they'd be out of range of the American vulture funds.

"There were days when three daily transfers were made to Switzerland, always with an eye toward having the smallest amount of funds in the account," they argue at the BCRA. And thus they say that it's the reason why that account only had US$1.7 million when the embargo amount is more than US$3 billion.

The embargo on the account in the U.S. came together under the argument that the creation of the Bicentennial Fund would show that "the Central Bank is an office of the Executive Branch" and that the reserves could be used by the government to pay any kind of debt.

One possibility is that the parties agree and Judge Griesa approves to add the US$1.7 million to the US$105 million embargoed years ago. And to go back to making the account operational, to not interrupt Argentina's transactions, but in that case with the commitment that it couldn't be subject to embargo again.

U.S. Government
Takes Action

Click here to view letters by the Administration and Members of Congress on Argentina's debt and economic policies.

The Debt and Europe

Click Here To Read More

ATFA Member Spotlight

Resolution on Argentina's Generalized System of Preferences Status (GSP)

Click here to view other ATFA member activity

Join Us
Show your support for ATFA and our work regarding debt default by joining our growing list of supporters.

Tell Your Friends
Do you have friends or colleagues who would be interested in supporting ATFA? Send them an invitation to this site by clicking here.