Buenos Aires, Argentina — With national finances crumbling, the government on Thursday tightened its grip on the banking system, freezing more of Argentines' savings in an effort to keep the country limping along.
After days of juggling the devastated accounts of the nation, the government finally unveiled a plan to protect banks from mass withdrawals by panicked depositors at least for the next months.
A demonstrator bangs pan lids during a protest outside the Argentina Supreme Court building in Buenos Aires. The protest was aimed at the court's decision to back strict banking limits placed on Argentina citizens in the wake of a fiscal crisis in the South American country.
It announced money over $10,000 in checking accounts and $3,000 in savings accounts will be switched into fixed-term deposits that will be off-limits to depositors for at least a year.
The banking restrictions announced Thursday were greeted by a demonstration in front of the Justice Palace. Hundreds of Argentines banged pots and pans to protest a Supreme Court decision that allowed the government to maintain what many Argentines feel is an unconstitutional freeze of their bank accounts.
Argentines had expected the government of President Eduardo Duhalde to lift banking restrictions Thursday, but instead it extended a ban on foreign exchange transactions until today, when people exchanging pesos for dollars must pay a floating rate.
Smaller balances could be transferred into pesos at the new official rate of 1.4 pesos to the dollar and withdrawn according to limits in place since Dec. 1, after a run on banks saw Argentines yank $2 billion in a single day.
Argentines can now withdraw 1,500 pesos, or just over $1,000 at the new official rate, from their checking accounts monthly, and an extra 1,200 pesos about $860 from savings accounts.
Waiting in line at a downtown branch of Banco Rio, Marcelo Borselli, a 31-year-old security guard who earns $570 a month, was desperate to withdraw his savings.
"I need to get my hands on my money. The government has to lift these restrictions," he said.
The next move the government could make lifting a ban on foreign exchange transactions, in place since street violence ousted former President Fernando de la Rua last month is fraught with danger.
The government has eased the peso's decade-old peg to the U.S. dollar to 1.4 pesos per dollar for imports, exports and large-scale business transactions, in the hope of boosting local industry and exports.
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