Informe de Estabilidad Financiera

This semi-annual report presents recent developments and prospects for financial stability in Argentina.

Preface

Financial stability (FI) can be defined as a situation where the financial
services sector can channel the savings of the population and provide a national payment service in an efficient
and sustainable way over time. The proximity (remoteness) to a context in which the possibility of
sustaining the provision of those services is threatened, due to bank runs, excessive leverage
, inadequate risk management policies or distortion of asset prices, would define the
degree of financial fragility (strength).
In our case, as in most emerging economies, a large part of financial intermediation
is channelled through the banking system, so the concept of FI focuses mainly
on the assessment of the conditions that make financial institutions function normally. In this
context, and in order to serve as a guide for policy implementation, the objective of EF leads from the
operational point of view to the adoption of measures aimed basically at addressing market failures (market power
, externalities or asymmetric information). In the context of the implementation of sound and stable macroeconomic policies
, the achievement of FI requires clear rules regarding the entry and
exit of institutions, adequate prudential regulatory framework and safety net, effective official supervision,
sufficient legal and institutional support for control bodies and mechanisms that encourage market discipline
.
The existence of a strong interrelationship between PE and economic growth justifies that PE constitutes
a social good that the State must seek and protect. On the other hand, in terms of policy implementation, the influence of the FI on the effectiveness of monetary policy, and its importance in the
functioning of the national payment system, must
be taken into account. Many Central Banks were founded, precisely, to
deal with situations of financial instability and currently most of them have as one of their
fundamental functions, directly or indirectly, to promote PE.”
To oversee the proper functioning of the financial market” is one of the primary functions that the Organic Charter
assigns to the Central Bank of the Argentine Republic in its Article 4. In order to fully comply
with this legislative mandate, it is necessary to complement the usual regulatory and
supervisory powers of the Central Bank with a communication strategy that is transparent and accessible to
all users of the financial system and to the general public.
The Financial Stability Bulletin presents a general assessment of the evolution of the
stability conditions of the financial system, bringing together the various channels of information of the BCRA
on the subject in a single publication. Both because of its comprehensive approach and its purpose of reaching
the common citizen, it can be said that the Financial Stability Bulletin is to financial stability what
the Inflation Report is to price stability.
The Financial Stability Bulletin can be approached in two different ways, depending on the
depth desired by the reader. The review of the Institutional Vision together with the synthesis of each
chapter allows the reader to capture the essence of the Bulletin. Naturally, the full reading of the report
offers a broad evaluation of each of the topics dealt with and is enriched by the analysis of
topics presented in the Sections.
In this first edition, the analysis is more oriented to the recent past, with special emphasis on the
regulatory refoundation and financial normalization that took place in 2003, without an understanding of
which it is not possible to project the general state of the banking system for 2004. The Financial Stability Bulletin
, which is published every six months, replaces the Monetary and Financial Bulletin, the last edition of which
corresponds to the period 2002. The date of the next publication of the Bulletin will be via
the Internet, the last week of September 2004, with statistical closure in the first half of this year.