http://www.boston.com/dailynews/337/world/Argentina_limits_cash_bank_wit:.shtml

Argentina limits cash bank withdrawals, trying to stem nationwide run on banks

By Laurence Norman, Associated Press, 12/3/2001 07:26

BUENOS AIRES, Argentina (AP) Argentina barred people from withdrawing more than $250 in cash per week from their bank accounts on Monday, trying to stem a nationwide run on banks and prevent economic collapse.

Long lines formed at cash machines Sunday as Argentines tried to get out their money before the restrictions went into effect. More than $700 million was yanked out of accounts on Friday alone amid growing fears about the economy's future.

Economy Minister Domingo Cavallo said the restrictions were needed to help stave off speculative attacks from investors he said were trying to force a devaluation of the nation's currency, the peso, and push Argentina into defaulting on its $132 billion debt.

The plan also restricts transfers abroad to $1,000 a month. Argentines can continue to use bank debit cards, credit cards or checks to pay for goods.

Cavallo slammed the speculators as ''vultures,'' saying they would not push Argentina into a financial crisis as they did Russia and Ecuador.

''All year long they have wanted to destroy Argentina,'' Cavallo charged in a television address Sunday. ''This time they are not going to walk away with our money. They are not going to defeat us.''

The Argentine peso has been pegged one-to-one with the dollar since 1991, but the system is based on having the same number of pesos in circulation as dollars in reserve. Heavy withdrawals of dollars throw the currency peg off balance and threaten the value of the peso.

In a separate televised address Sunday, President Fernando De la Rua promised that Argentina would not pushed into relinquishing the peso's one-to-one connection with the dollar.

''There will be no devaluation, we are maintaining convertibility,'' De la Rua said.

Seeking to dampen fears among Argentina's 36 million population, the government said the banking restrictions would remain in place for just 90 days as it tries to complete a debt swap with foreign creditors.

The economic crisis has fueled 16 percent unemployment and set off frequent social protests over cost-cutting measures including pension reductions and cutbacks in state worker salaries.

In recent weeks, the downturn has grown even worse. This past week the stock market fell to a 10-year low as Argentines.

Meanwhile, Friday's withdrawals continued what has been a months long slide in bank deposits. Banks in Argentina have lost $14.5 billion, or 17 percent of their deposits, since January, causing a sharp decline in central bank reserves.

With the government also issuing more than $2 billion in negotiable scrip special government bonds to pay thousands of state workers, the pressure on the peso has been building.

-- Anonymous, December 03, 2001

Answers

link from Dan

http://news.independent.co.uk/world/americas/story.jsp?story=108003

-- Anonymous, December 03, 2001