A reconstruction of the monetary policy framework in Argentina during the Covid-19 pandemic

Juan Matias De Lucchi, Ariel Dvoskin and Germán D. Feldman

Chapter 1 in Central Banking and Monetary Policy Implementation, 2025, pp 1-25 from Edward Elgar Publishing

Abstract: The chapter reconstructs the policy framework of the Central Bank of Argentina (BCRA) from the Covid-19 outbreak in March 2020 to the beginning of the massive vaccination campaign in the first semester of 2021. On the one hand, it examines expansionary fiscal and monetary policies to protect firms and households during the lockdown. On the other hand, the chapter describes the BCRA's FX regulations and monetary policy operations to defend the crawling peg system from the increasing pressures in the foreign exchange market. Some relevant channels of financial outflows are addressed: non-resident investment funds’ flight to quality, households’ portfolio dollarization, and firms’ external debt deleveraging. Following the Latin American structuralist tradition, the authors argue that the BCRA's political-economy challenge was to support the pandemic-related policy package without triggering the breakdown of the prevailing exchange rate system. Such a collapse would have implied a large currency devaluation and, consequently, a worsening of the economic recession and social conditions.

Keywords: Central banking; Monetary policy; Argentina; Covid-19; Interest rate; Latin America (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035302796
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