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

Between July and September 1998, a set of circumstances, including the Russian devaluation and moratorium in August of this year, accentuated the international financial crisis. This new stage of the crisis, which began to generate some effects in industrialized countries, hit Latin American economies hard, registering a significant increase in sovereign risk and a sharp limitation on access to international capital markets. In this context, the Argentine economy observed a significant slowdown in its growth rate driven by lower growth rates of investment and exports.

Likewise, lower international liquidity had a significant negative impact on local debt and equity markets. However, the prices of Argentine public securities registered a favorable evolution in relation to those of
the other emerging countries.

The evolution of monetary resources in the quarter under analysis showed a significant decrease in their growth rate, explained both by the reduction in the holding of banknotes and coins by the public, and by the decrease in the growth rate of deposits. Despite the latter, loans to the non-financial private sector experienced a monthly growth similar to the average of the last twelve months. In the context of illiquidity and greater uncertainty, interest rates generally registered significant increases. On the other hand, as capital inflows slowed down, the international reserves of the financial system did not show a significant change in their level, although they underwent a significant change in their composition.

From the analysis of the financial statements of the entities in the banking sector, in the period under analysis, it can be seen that the destination given to the funds received was adjusted to the conditions of greater macroeconomic and financial uncertainty. The profitability of the sector, although positive, was significantly lower than that recorded in the same period twelve months earlier, as a result of the lower result for holding financial assets. Lower administrative expenses and bad debt charges in terms of assets supported this result. For their part, the main non-performing loan indicators of the financing portfolio experienced significant reductions. Finally, although there was a decrease in the excess integration of capital due to credit risk, the excess of total integration in terms of the requirement (considering credit and market risk) increased slightly as a result of the recovery in the price of financial assets in the portfolio at the end of the period.