Argentina and Europe - Abuse of the Bank of International Settlements (BIS)

  • Argentina's default has since cost global lenders and taxpayers more than $30 billion to date, including accrued interest.  With nearly $50 billion in foreign reserves, Argentina can afford to repay what it owes.  Courts in Germany, Italy, and the U.S. have issued hundreds of judgments ordering Argentina to repay its debt yet Argentina has continued to ignore these judgments.
  • Argentina is holding nearly $40 billion of foreign reserves (around 80% percent of its total reserves) in the Bank of International Settlements (BIS) in Switzerland in an attempt to skirt debt repayment and leave its reserves untouched by private banks.  Argentina is now in a position of relative strength because of its reserves in the BIS. (Click here for more)
  • The $40 billion figure equals over 10% of all foreign currency reserves held in the BIS by Central Banks and other global financial institutions (totaling 140 institutions). (Click here for more)
  • Argentina is abusing the BIS by holding a large portion of its reserves in the BIS and inaccessible to private banks and immune to attachment.  These reserves should instead be used to repay its private creditors, including thousands of Italian and German pensioners.
  • The Swiss Government can demonstrate that it is a good global citizen by upholding the sanctity of private contracts and the international lending system; the Swiss Government can and should intervene by not allowing a renegade like Argentina to abuse their system.
  • As of January 2009, Argentina reportedly has the audacity to float a new debt exchange to its private creditors on reportedly worse terms than the 2005 restructuring while inflating its reserve figures and hiding them away from private creditors.

Key Figures

German investors
hold $4 billion in Argentine bonds.

German taxpayers
lost a total of $1.5 million as a result of the Argentine default and restructuring
(in 2004 taxes).

Total direct costs
in Germany amounted to $5.6 billion.

Italian investors
hold $4.5 billion in Argentina bonds.

Italian taxpayers
lost $4.3 million due to Argentine debt (in 2004 taxes).

Total direct costs
in Italy amounted to $13.7 billion.

Source: Robert Shapiro, "Discredited: The Impact of Argentina's Sovereign
Debt Default and Debt Restructuring on US Taxpayers and Investors," American
Task Force Argentina, October 2006; Dow Jones, "European Investors Skeptical
About New Argentina Debt Deal," October 27, 2009

Creditors worldwide are owed $35.7

Worldwide taxpayers incurred costs
totaling $29.9 billion due to reduced revenues their governments otherwise
would have collected.

Argentina's debt default and restructuring
have resulted in a global net cost of $157.7 billion.

Source: Robert Shapiro, "The Continuing Cost of Argentina's Debt Default
and Restructuring For Bondholders, Taxpayers, and Investors In the United States
and Worldwide," American Task Force Argentina, November 2009