Re: Keynesian Christmas!-- and the collapsiing international payments system -Argentina and the ensuing slippery slope

[William F Hummel <wfhummel@xxxxxxxxxxxx>]

Kazuhiro Kurose wrote:

>According to FT, Argentina decided to introduce "third currency" called the argentino. This is the denomination, except
>the point that its currency"will circulate alongside the peso and the US dollar". I'd like to ask you how large effect
>the introduction of new currency has on getting the economy out of its economic crisis.
>
I don't think anyone really knows whether the new currency will
benefit or hurt the economy.  It's an experiment.

I have seen no details on how the argentino will be issued, or
whether banks will accept deposits in it.  If they don't, then
the new currency will be a minor player in the economy.  The
important question then is how bank deposits in the argentino
would retain their own value without a mechanism to control the
interest rate on short-term loans in the currency.  The central
bank normally does that through its open market operations.
Until we have the details, I don't think it is clear what the
future of the argentino will be.

William F Hummel