BCRA: Santiago Bausili defended the reform of the Organic Charter and the possibility of using gold as collateral

The president of the Central Bank, Santiago Bausili, defended this Thursday the project to reform the Organic Charter of the Central Bank that the Government sent to Congress. He also rejected criticisms from opposition economists regarding the possibility that the entity could take on debt abroad using its reserves as collateral.

"Why would it be any different from what can be done today?" the official questioned during a brief talk with journalists at the Torcuato Di Tella University, where he discussed the Government's proposal to grant greater degrees of independence to the entity.

In this regard, Bausili indicated that the possibility of using the entity's assets as collateral to obtain international financing is already permitted, based on interpretations of the current Organic Charter.

"These are technical elements whose interpretation has changed. This article ---33---, as it is written, has evolved over time and, if we update it, we will be able to carry out the same operations we currently do in a more efficient, cheaper way and without having to go through legal loopholes," he added.

The official explained that "people have really latched onto that article 33." From there, he pointed out that an element included in the Convertibility Law was taken, according to which the Central Bank's international reserves are unattachable.

"We rescued that phrase and incorporated it into the Organic Charter. This relates to preserving the reserves, but above all, to domestic jurisdiction, because the Organic Charter does not have jurisdiction over those that are outside," he emphasized.

This would allow the entity to offer as collateral assets such as U.S. Treasury bonds, Global titles of the national government that are part of the reserves, or gold located abroad, within the framework of a REPO operation, something that has already been done during the current administration.

Bausili noted that "if desired, it could be done with gold. It hasn't been done, but if desired, it could be done with that or any other asset of the Central Bank."

"So, that can already be done today. What happens is that the Organic Charter is written in an outdated way," he explained. He also added that "the financial market and its instruments have evolved over time, but the regulations have become outdated."

"So, you structure it by giving it a legal twist to do what the financial market requires, which is guaranteed financing. Since the clauses of the Organic Charter are not updated, you end up having to hire a lawyer to design something special that allows you to achieve the objective," he explained.

The official participated in a panel alongside Randall Kroszner, a professor at the Chicago Booth School of Business and former governor of the Federal Reserve System, and Alberto Cavallo, a professor at Harvard Business School.

Álvarez Agis: "It’s a license to incur debt"

Earlier, former Deputy Minister of Economy Emmanuel Álvarez Agis questioned the project presented by the Government to Congress, which, he warned, would allow the Central Bank to incur debt abroad.

"Leftist populisms give away money and rightist populisms give away dollars and, when these run out, they take on debt," he stated.

"This charter gives a license to right-wing populism. It expands the possibility of issuing external debt in dollars. I suspect it would be a REPO, a swap, or a Bopreal D, under New York law," explained the opposition figure.

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