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Chinese central bank weighs in to help Argentina avoid default to IMF

Press Releases Crypto News CryptoDaily UK Chinese central bank weighs in to help Argentina avoid default to IMF

A currency swap with the PBoC together with a loan from the Development Bank of Latin America helps Argentine central bank to meet $3.7 billion obligation to IMF.

IMF enslavement

The International Monetary Fund (IMF) was established after the Bretton Woods agreement, and since then has provided loans to developing countries, however some have pointed out that the loans have served to export the dollar and enslave countries with repayments rather than help them to develop.

Argentina is one of the most indebted countries in the world, having defaulted many times in its torrid financial history. The latest default avoidance was made possible by the People’s Bank of China stepping in and providing the means for Argentina to meet its IMF obligation by way of $1.7 billion in yuan currency swaps.

According to the South China Morning Post, the intervention of the PBoC and the Latin American Development Bank has only succeeded in buying time for Argentina. Ariel Gonzalez Levaggi of the Pontifical Catholic University of Argentina was quoted by the SCMP as saying “it does not provide a viable way out for Argentina.”

However, it does mean that for now Argentina does not have to dip into any of its dollar reserves, which wouldn’t have been adequate with which to pay the debt and would have placed the country in an extremely precarious situation.

Further encroachment into dollar hegemony

This recent move by China is seen by many as an attempt to undermine the use of the US dollar for debt settlement, and another nail in the coffin of de-dollarisation. Alexandre Coelho of the International Political Science Association, and former legal advisor to the Bank of China said on the matter:

“Although the renminbi has been part of the IMF currency basket since 2016, its use for debt settlement is not common. The path chosen by Argentina sets a precedent and may, in the future, be adopted by other emerging countries in a similar situation,”

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Author: Laurie Dunn

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