Central Bank of
Argentina quadruples cap on bank deposit insurance to better
reflect falling peso
Argentina has raised its deposit insurance cap as the
central bank continues to introduce measures to adjust to
the effects of rising inflation in the country.
The Wall Street Journal, a financial newspaper, on Tuesday
reported that the Central Bank of Argentina had quadrupled
the guaranteed insurance on bank deposits in the country to
Ps120,000 ($30,000) from Ps30,000, placing the new limit
closer to regional neighbours Uruguay, which imposes a
$29,040 cap, and Brazil, where the cap is $35,531. The
central bank was not available for comment on the measure.
The move comes as rising inflation in Argentina continues to
impact the value of the peso. Inflation in Argentina rose by
11% from November 2009 to November 2010. During the same
period, the peso lost 4.3% against the dollar, and has
fallen by a total of 22.6% since the onset of the financial
crisis and the collapse of Lehman Brothers on 15 September,
2008. The greenback traded at Ps3.9755 at 4pm in London.
The central bank has linked the high inflation to an "evolution
of commodities prices". Argentina's deposit insurance system
was created in 1995 and charges banks a fee of between
0.015% and 0.06% on the average daily value of their peso
and foreign currency-denominated deposits.
This is the second such measure the central bank has taken
in a matter of days to reflect high inflation in the
country. A shortage of high-denomination banknotes led to
long queues appearing at ATM machines across the country
prompting Argentina's central bank to set up a special
operation to distribute Ps5 billion worth of 100 peso bills.
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