LELIQs: A Problem or An Opportunity?

By Miguel Ángel Pesce I President of the BCRA

I have already discussed the difference between the monetary tools of the BCRA and their implications for the economic and monetary policy. In this sense, I will reinforce the role of liquidity bills (LELIQs) in the current context.

In Argentina, the stock of deposits in pesos at financial institutions reaches ARS35 trillions, out of which ARS18 trillion are time deposits. In turn, the stock of loans to the private sector stands at ARS12 trillion.

The figures show an imbalance between lending capacity and effective demand for credit.

The BCRA absorbed the resulting difference by placing LELIQs for ARS15 trillion in order to channel liquidity surplus, thus preventing its negative effect on interest rates—especially lending rates (fixed terms).

The interest rate on LELIQs is paid to the banks that are obliged to pay the minimum rates determined by the BCRA to depositors and companies. This measure seeks to preserve the relative value of savings.

All in all, the savings of companies and households should be channeled towards productive investment in order to redress the imbalance between the lending capacity of the banking system and the demand for credit.

In the coming years, the growth constraints caused by external issues will be overcome thanks to the dynamic performance of exports of strategic sectors such as oil and gas, mining, agribusiness and knowledge-based services. Therefore, bank financing will be essential to promote the path of development. To this end, it is necessary to preserve the value of savings and develop a deep and transparent domestic capital and financial market.

To relate LELIQ's yield to the fiscal deficit is an error that may trigger misguided policies, preventing the future channeling of local savings to productive investment and financing of consumption.

October 3, 2023

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