Argentine banks’ holdings of public debt are to be restricted to a maximum of 35% of their assets, the central bank has announced. The measure aims to reverse the crowding-out effect by inducing banks to focus on private investment. “This provides additional degrees of freedom to conduct monetary policy, increasing the systemic independence from treasury needs and minimizing the ‘fiscal dominance’ that historically characterized our economy,” says Martin Redrado, Argentina’s central bank governor.
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