Moderate Central Bank President Resigns

ARGENTINA - In Brief 01 Oct 2014 by Esteban Fernández Medrano

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Today Juan Carlos Fábrega presented his resignation as President of Argentina's Central Bank (BCRA). As his replacement President Cristina Fernández de Kirchner (CFK) appointed Alejandro Vanoli, former president of the National Securities Commission (CNV), the local capital market regulator. Fabrega’s resignation came in after yesterday CFK made elliptic criticisms to the Central Bank during a speech, declaring that too little was done to control the Blue Chip Swap market (and through it the informal FX rate). She also stated that she suspected that some of the Central Bank monetary measures (such as obliging banks to sell dollar assets), might have been leaked as some banks were seen selling dollars before the measure was officially announced. Therefore, despite of the fact the Central Bank Presidency lasts for 6 years, that Fabrega’s term lasted until November 2019 and that “in theory” his position is independent from the Executive Power (even though the Executive Power can remove the BCRA president after a formal consultation to the Congress, as was the case with Redrado), Farebga decided to step aside. As we pointed out in our last report, even though Fabrega also implemented some heterodox measures, his monetary approach, with an aggressive sterilization policy, was all in all relatively coherent, in line with basic market rules. But his attempt to curb inflation expectations and devaluation pressures through rising interest rates (strong Lebacs/Nobacs issuances) faced more often than not the criticism of the Economy Minister Axel Kiciloff. Recall also that last January’s devaluation was not consulted with the Economy Minister. Yet his policies also faced serious ...