Following the announcements, banks unwound their loans and the Central Bank’s debt stock fell 30% in one day

The start of phase 2 of the economic plan began with a strong move by the banks. After the announcement last Friday of the plan to transfer the Central Bank’s debt to the Treasury, private financial institutions on Monday got rid of part of the passive repos and the stock of that debt issued by the Central Bank. fell by almost 30% in a single day, a drop of unusual magnitude.

The passes are the remunerated liabilities (exLeliq) that Javier Milei and Luis Caputo They seek to eliminate in order to lift the restriction. These are securities that the BCRA uses to absorb the monetary surplus and the banks buy to obtain a return on savers’ deposits. The Minister of Economy announced on Friday that they were going to speed up their transfer to the Treasury by issuing new Treasury bills (Leremo) and on Monday he informed the banks of this.

Amid the negative reaction of the markets that led to the rise of financial dollars and the fall of stocks and bonds on Monday, The stock of passes was reduced from $16 to $11 billiona $5 billion drop that was explained by the $3.5 trillion dismantling of public banks and $1.5 trillion of private banks“This brings the current stock to $11 trillion ($7 trillion from public banks and $4 from private ones),” estimated economist Salvador Vitelli.

The Central Bank explained that the drop was due to “normal movements” at the beginning of the month to meet their needs. “There was minimal cash integration because they need to compensate for the reserves”. While in the financial sector it was mainly attributed to the settlement on Monday of the Treasury debt auction last week and the decision of the banks to wait for the new debt instruments.

“They are negotiating with the banks to change the repurchase agreements for placements in the debt auction until all the daily passive repurchase agreements are eliminated. The issue of reserve requirements is never so grossly important, many placed those pesos in the auction, more than $8 billion were placed when more than $5 billion were due, and then a minimal percentage because it was the beginning of the month,” said a source close to the BCRA.

Although entities usually reduce repo operations at the beginning of the month and before the weekends, banks recognize that there are expectation for the lyrics that Caputo will release in the next few hourswith the guarantee of the BCRA. They want to see if the bonds will not pay Gross Income and they will be able to capture “higher rates”, as promised by the minister. Another version that circulated in the last few hours is that an important bank exercised puts and eliminated swaps to obtain liquidity, something that the authorities deny.