The recent launch of Phase 3 of the economic program included the flexibilization and exchange rate float, supported by the cleanup of the balance sheet of the Central Bank of the Argentine Republic. In this context, the monetary aggregates scheme was improved to strengthen the monetary regime.
The transition to the new exchange rate regime was implemented in an orderly manner, without shocks, which was reflected in:
1. The stability of the exchange rate and interest rates in the money market.
2. The decrease in the price of financial dollars and the elimination of the exchange rate gap with the official dollar price.
3. A downward trajectory of inflation during the transition period.
4. Anchored private sector inflation expectations, aligned with the ongoing disinflation process.
The measures detailed below seek to consolidate these achievements and guarantee a horizon of greater predictability in the monetary balance.
I. Measures to strengthen international reserves
1. Public bond tender program with subscription in dollars
The Ministry of Economy’s Finance Secretariat announced that it will incorporate, in the schedule of public bond tenders for 2025, the modality of direct subscription in dollars. This option will be available from June 2025 for placements with terms longer than one year, with a monthly limit of USD 1,000 million.
The minimum holding periods will be eliminated for non-residents who invest through the Free Exchange Market (MLC) or in primary placements of the Ministry of Economy with maturities greater than six months.
2. Placement of repos in dollars with international banks
Following what was announced at the beginning of Phase 3, the BCRA called for the second tender of its repo program with international banks. After the initial placement of USD 1,000 million in December 2024, the program foresees an additional issuance of up to USD 2,000 million. The operation is scheduled for June 11, 2025.
II. Measures to strengthen the monetary regime based on the control of monetary aggregates
1. Reduction of contingent monetary liabilities of the BCRA
The BCRA will advance in the elimination of potential sources of monetary expansion, cleaning up its balance sheet and strengthening the control of monetary aggregates. To this end, on June 10, 2025, a repurchase of put contracts on Treasury bonds held by banks will be carried out, complementing the operation carried out on July 18, 2024.
This measure, aligned with a monetary policy focused on monetary aggregates, guarantees greater control over the amount of money and reinforces predictability in the reduction of inflation, by eliminating potential sources of discretionary monetary issuance.
2. Additional absorption of monetary liabilities through BOPREAL With the aim of advancing in the resolution of inherited exchange rate imbalances, the BCRA will offer Series 4 of the BOPREAL to entities with external obligations related to debts or dividends prior to 2025, and commercial debts with a date prior to December 12, 2023. Successive tenders will be held, with the first taking place on June 18, 2025, under similar conditions to previous series.
3. Monetary reorganization after the expiration of Fiscal Liquidity Bills (LEFI)
The Fiscal Liquidity Bills (LEFI), which fulfilled their purpose of facilitating the elimination of the BCRA’s remunerated liabilities during Phase 2 of the stabilization program, have a maturity date of July 17, 2025. As of July 10, 2025, the BCRA will no longer offer financial entities the possibility of subscribing to LEFI.
Initially, the LEFI absorbed the surplus banking liquidity, transferring the obligation of its remuneration to the National Treasury. Banks used the LEFI to manage their liquidity in a context of transition towards a monetary framework aimed at eliminating inflation and promoting credit to the private sector. As this monetary surplus was reduced, its stock came to represent minimum transactional balances.
However, more recently, the placement of LEFI at predetermined rates and without quotation in the secondary market, began to attract balances that in an orderly monetary system could be channeled towards conventional liquidity alternatives. From now on, banks will be able to reorient these balances to other applications such as their current accounts in the BCRA, Ministry of Economy securities, guarantees in the private market or other instruments that they determine.
In anticipation of its expiration, the Ministry of Economy and the BCRA will exchange the stock of LEFI in the BCRA’s asset for a portfolio of short-term peso securities (LECAPs) with quotation in the secondary market. In accordance with the mandate established in Article 4 of the Organic Charter, the BCRA may actively participate in the secondary market for short-term public securities whenever it determines that its participation is necessary to contribute to the proper functioning of the capital market.
This reorganization consolidates a more conventional monetary aggregates control framework, eliminating the notion of a “monetary policy interest rate” typical of schemes such as inflation targeting. Instead, the interest rate will be determined endogenously by the market, in line with a regime focused on monetary aggregates.
4. Adjustments in the reserve requirement policy to reduce distortions and strengthen monetary control
The BCRA will continue to strengthen the prudential framework of the financial system, progressively increasing the minimum cash percentage for items that generate greater volatility, limit sustainable development and make credit to the private sector more expensive.
Considering the evolution of monetary aggregates, the impact of the measures announced and the seasonality in the demand for money, the BCRA will define the appropriate time to unify the minimum cash percentage applicable to remunerated accounts, regardless of the type of depositing entity.
