The Deputy Governor of the BCRA, Vladimir Werning, delivered the presentation titled “The Cycle of Credit (Rebound) and Delinquency (End): Monetary Stability Supports Credit; the Tax Burden on Credit Fuels Delinquency,” at Universidad Torcuato Di Tella on October 26, 2026.
The presentation was structured around two sections and six themes. The first section addressed the key elements for understanding the delinquency cycle; the second section focused on appropriate policy responses to consolidate the improvement in credit and reduce delinquency levels without incurring moral hazard.
WHAT IS IMPORTANT TO UNDERSTAND ABOUT THE DELINQUENCY CYCLE?
I. CONTEXT: Two stages of the banking system and different degrees of increase in non-performing loans. Private credit and delinquency cycle (2026) vs. public credit and potential delinquency crisis (2023).
II. CHARACTERISTICS: The measures that describe the cycle of non-performing private loans. Comparative cycles of non-performing private loans and their current state (an end-of-cycle).
III. DETERMINANTS: Interest-rate dynamics before and after the electoral shock. A root cause (expectations of higher CPI, nominal exchange rate) and an aggravating factor (a two-speed rate cut).
WHAT IS ADVISABLE TO DO IN THE FACE OF THE DELINQUENCY CYCLE?
IV. AVOID: Proposals with moral hazard (a smaller stock of non-performing loans at the cost of a higher future flow). Four populist demands to use public resources without regard for their costs/risks.
V. MOVE FORWARD: Responses without moral hazard that the BCRA has implemented or is in the process of advancing. Improvements in the supply, quality, and cost of credit for individuals, companies, and merchants.
VI. CONSIDER: The factors that most affect the lending rate to reduce delinquency levels more quickly. The impact of fiscal policy (provinces/municipalities) > impact of monetary policy (BCRA).
