Through an extensive article published in his personal blog, this Saturday the former Minister of Economy Domingo Cavallo He argued that Purchase of international reservations by the Central Bank will help Consolidate the disinflation processwill promote re-monetization and support the passage to a system of coin competition.
The former official said that the intervention of the BCRA to acquire reservations, even after the Crawling PEG and when the official exchange rate remains over the $ 1000, I should not raise inflationas they argued from some sectors of the government.
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“Argument that after having eliminated restrictions for access to the official exchange market of human people and having abandoned the crawling PEG to go to a flotation between bands, the purchase of reserves, even when the exchange rate does not fall to the band of the band, Far from complicating the disinflation process, it will help consolidate it“He explained at the beginning of the publication.
Cavallo indicated that “the reasoning of the Central Bank, which argues that this intervention would be inflationary, is not strictly correct” and pointed out that the necessary issuance to buy currencies would reinforce the demand for moneyat the same time as country risk would decrease and would contribute to sustained growth of GDP.
“That the official dollar goes too much would not be desirablebecause it would affect external competitiveness, “he warned later and anticipated that the exchange rate will not fall to the band’s floor as long as the Restrictions on exchange access for companies.
About the type of real changeformer Minister of Economy highlighted the Withholdings to industrial exportsalthough it marked as “counterproductive” the fact that in July they will return to increase agricultural withholdingsarguing that “does not stimulate long -term productive investment.”
“If you want to avoid a rise in the real interest rate, it is necessary to allow the supply of money to increase”he later added with respect to monetary policy and argued that the re-monetization From the economy it should be generated by the purchase of reservations rather than by the payment of debt in pesos with issuance.
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The former official also supported the intention of the Minister of Economy to set the objective of the coin competition where a coexistence between the peso and the dollar is generated, for which it determined as a necessary step that the obstacles that prevent banks to lend deposits in dollars without converting them to pesos are eliminated.
“For the dollar to fulfill all the functions of the peso, the exchange market for companies must also be releasedas already done with human people, “he explained and pointed out that” the meaning and advantage of a currency competition system is that people can choose between handling their savings indistinctly in pesos or dollars and that deposits in either of the two currencies can lead to the same type of financial intermediation. “
On his extensive article, he summed up: “To be able to move towards a monetary regime of currency competition to the Peruvian, (I hope what the Minister of Economy has announced for a few weeks)it will be essential that they finish eliminating exchange restrictions that still affect companies and still mean financial repression. “
As/in
