The BCRA co-chaired—with the Ministry of Economy—the G20 Meeting of Finance Ministers and Central Bank Governors, held in the city of Buenos Aires on March 19-20.
Below is an article written by Federico Sturzenegger, Governor of the BCRA.
Argentina’s G20 Presidency and the BCRA’s Agenda
The theme of Argentina’s G20 presidency is “Building consensus for fair and sustainable development.” How can we translate this goal into tangible results?
The initial step will be taken at the first Meeting of Finance Ministers and Central Bank Governors, to be held in Buenos Aires on March 19-20.
In a time when the global economy runs the risk of dismantling the system of multilateral agreements that has laid the foundations of a growing world in the last half century, it is crucial to maintain a space for dialogue for achieving strong, sustainable and inclusive growth. This is really one of the key assets of the G20 for the world.
Against this background, one of the priorities of Argentina’s G20 presidency is to foster the financing of infrastructure for development. There is no need to explain why it is important to invest in infrastructure.
There is a paradox, though. While the developed world is sitting on quintillions of assets with negative yields, there are plenty of infrastructure projects with high returns out there.
For instance, Argentina has just completed two transport-related projects with annual rates of return of 150%. Certainly, there is a gap that needs to be closed. How can low-return savings be channeled to this kind of projects?
In the late 80s, multilateralism gave way to the Brady Plan, which transformed emerging countries’ debt to banks into market debt, virtually creating a sovereign debt market that became the cornerstone of financial markets.
Today, Argentina proposes replicating that mechanism by creating a new asset class: the underlying assets would be easy-to-understand, standardized infrastructure contracts with a common legal structure and dispute resolution procedures.
The infrastructure financed through this mechanism offers many advantages: it allows for risk diversification, provides liquidity to a highly illiquid type of investment, and serves as a strong antidote to corruption.
Under the Argentine presidency, the G20 will also continue its work on financial inclusion, this time focusing on digitization, payment infrastructure and the advent of artificial intelligence for identifying and assessing potential borrowers that are currently excluded. Cybersecurity and cryptocurrencies have also grown in importance in the group’s agenda.
Therefore, the G20 ministerial meeting is the perfect opportunity for Argentina to return to dialog forums and international cooperation. An action that will eventually mean increased welfare for everybody.
