Presentation of the Deputy Governor of the BCRA at FLAR XIX Conference in Cartagena, Colombia
Vladimir Werning, Deputy Governor of the BCRA, has presented “Argentina's Stabilization Program: Reversing Terminal Stage Fiscal Dominance over Monetary Policy”, at the FLAR XIX Annual Economic Studies Conference. The meeting was held on August 9, in Cartagena, Colombia.
This event brings together economic authorities, academics, senior researchers from central banks and finance ministries, and representatives of international financial organizations, seeking to encourage discussions on key issues for Latin America’s macroeconomic and financial stability.
AGENDA
I. OVERVIEW: The Stages of Monetary Submission to Fiscal Policy
• Key Research
• Progression of Fiscal Dominance
• Mechanics of Fiscal Dominance
II. ARGENTINA IN THE 20th CENTURY: Stylized Fiscal, Monetary and Inflation Facts
• High Fiscal Deficits & High Inflation Have Prevailed
• Fiscal Imbalances Have Coexisted with External Imbalances
• Monetary Policy Has Adopted a "Back Seat Approach"
III. ARGENTINA 2009-19: Transition from Structural (Stage 2) to Systemic (Stage 3) Fiscal Dominance
• BCRA Tools Served to Accommodate Fiscal Deficits
• BCRA Balance Sheet Served to Fund Fiscal Deficits
IV. ARGENTINA 2020-23: Descent into Terminal (Stage 4) Fiscal Dominance
• Fiscal deficits persisted even after debt restructuring and after the IMF program
• Divergence Between BCRA Remunerated Liabilities and Net Reserves Reaches Extreme
• Interest on BCRA Sterilization Becomes Major Source of Endogenous Money Growth
• Contractual Commitments (Bids & Puts) Shifts Dominance from Fiscal to Banking System
V. ARGENTINA'S 2024 STABILIZATION PROGRAM: A Swift Reversal of Terminal Stage Fiscal Dominance
• Avoiding Hyperinflation: Eliminating "Fiscal Dominance" over Monetary Policy from Day 1
• Anchoring the Money Supply: Tackling "Quasi-Fiscal Dominance" over Monetary Policy
• Remonetizing a Bi-Monetary Economy: Reversing "Fiscal Crowding Out" of the Private Sector
August 9, 2024
