Boletín Monetario y Financiero

This bulletin was published quarterly between 1995 and 2001, until 2002, when an annual edition was presented. The publication included an analysis of the behavior of the international and local economy, the capital market and the main regulatory changes that occurred in the period, as well as the main developments observed in monetary variables and in the financial system.

Executive summary

During the first quarter of 2001, signs of slowdown continued to be evident in the main developed economies, prompting various monetary authorities to reduce their reference interest rates. This allowed emerging countries greater access to international capital markets during the first part of the quarter, a trend that would later be reversed given the revision of expectations in a context aggravated by the crisis and devaluation in Turkey.

At the local level, the level of economic activity continued to show no signs of recovery, with foreign trade being the only element with some dynamism. For its part, the domestic capital market, having started the quarter auspiciously by benefiting from the successive rate cuts carried out by the US Federal Reserve, registered a negative evolution throughout the period under consideration. The uncertain local political events, added to the increase in the perception of risk among international investors, resulted in a deterioration of the main financial variables of the domestic market.

The money market was not immune to the confluence of factors, both external and domestic, to which is added the influence of the actions of institutional investors. In this sense, despite having managed to achieve an initial gradual recovery, during the month of March there was an abrupt deterioration in the main monetary variables: fall in deposits, greater dollarization, decrease in international reserves and higher interest rates.

The banking sector experienced a decline in the level of intermediation during the first quarter of 2001, given the significant reduction in deposits and the existence of restrictions on access to other types of funding. In this context, the main sources of resources turned out to be the sale of liquid assets and a decrease in the level of loans to the non-financial sector. In terms of aggregate profitability, the Argentine banking sector showed progress, mainly due to the gains obtained from the holding of financial assets and higher interest earnings, to which was added a largely seasonal decrease in administrative expenses. These aggregate results are strongly influenced by the behavior of larger private banks, with significant heterogeneity among the different subgroups of banks. Solvency indicators, on the other hand, also showed a strengthening, given an increase in capital integration that occurred simultaneously with a decrease in its regulatory requirement, the latter explained by a decrease in risk-weighted assets as a result of a change in the composition of financing.