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Argentina: Bank independence at stake as Redrado exits

Governor leaves after stand off; $6.6bln transfer at root of conflict

Jason Mitchell 

Martin Redrado’s resignation as governor of the Argentine central bank marks the end of a period of relative stability at the monetary authority. His departure following a bitter struggle with the country’s president, Cristina Kirchner, over the use of the bank’s reserves, has led to fears that the central bank’s independence could become compromised with Kirchner and her husband, former president, Nestor pulling the strings.

Redrado’s exit can be traced back to December 14, when Kirchner passed an emergency decree to set up a Bicentennial Stability and Reduced Indebtedness Fund to finance public debt that matures this year. This involved the transfer of $6.6 billion in bank reserves to the national treasury. Controversially, she said that the central bank had $18 billion in “excess reserves”. This sparked off one of the worst constitutional crises in Argentina since the country’s economic meltdown in 2001.

Redrado only learned about the decree a couple of hours before it was issued and was strongly opposed to the move. He was reluctant to instruct the bank to make the transfer and, on January 8, Kirchner signed another decree in which she fired him and accused him of “misconduct and dereliction of duty by a public servant”.