Analysts believe that the ghost of the restriction of dollar depositors, popularly referred to as “corralito,” still haunts Argentines who prefer to hold their savings in cash dollars rather than in banks, even after the approval of the Fiscal Innocence law.
Key Takeaways:
Milei’s tax-free law failed to attract even $1 billion of the $170 billion held outside banks, curbing liquidity. Facimex Valores Adrián Yarde Buller notes that citizens distrust banks due to the 2001 crisis. Milei has walked back his main campaign promise to dollarize Argentina, citing peso preference. Argentines Still Distrust the Government: Fiscal Innocence Law Struggles to Gain TractionWhile President Javier Milei could have had the best intentions by approving the Fiscal Innocence Law to incentivize inflows of previously undeclared dollars into the financial system, Argentines are not buying it.
Nonetheless, even after Milei passed the aforementioned law, which licenses citizens to insert these funds without tax implications, dollar deposits have not risen by even $1 billion.
Adrián Yarde Buller, chief economist at Facimex Valores, referred to the great opportunity that this law presents, even though it has not yielded the expected results yet.
Experts believe this phenomenon is linked to a natural distrust that Argentines have of the banking system after the so-called “corralito,” a measure taken by the government in 2001, which encompassed the conversion of dollar deposits into pesos at an unfavorable rate and limited withdrawals.
Nonetheless, he has recently walked back this idea, claiming that Argentines prefer the peso instead of the dollar due to the tepid response to the Fiscal Innocence law.
“People don’t want it. Strictly speaking, you can’t force things on people,” he recently stated.
