NEWS
Argentina currency crisis plays out at the racetrack
Posted: Tuesday, December 18, 2001
While the Argentine federal government tries to keep its banking system afloat, the provincial government of Buenos Aires—and the province's racetracks—are circulating their own bonds as currency.
On December 1, the Argentine government imposed a partial banking freeze, limiting cash withdrawals to $1,000 per month per account and limiting cash payouts at the racetrack to the same amount, with any winnings over $1,000 to be paid by check, and therefore subject to the withdrawal restrictions once deposited. Under mounting political pressure and the disruption of general strikes that began last week, Economy Minister Domingo Cavallo has since raised the maximum amount to $1,500 during December and January.
But beginning in August, the Buenos Aires government began printing bonds, called "patacones," to pay state workers. Last week, the Palermo Hippodrome began accepting wagers in patacones as well.
"To start with, we wouldn't accept them," Hippodrome Grandstand Manager Orlando Ruarte told the Associated Press. "But now they're starting to look like money."
With several of the country's other 22 provinces following the example of Buenos Aires and printing up their own bonds, the federal government's Central Bank began printing its own bond, the "lecop," as a defense measure, fully exchangeable with any of the other renegade currencies. But the Palermo Hippodrome will not accept them.
"Not yet," said Ruarte's assistant Martin Aracama, "because they're not really in circulation yet. But we are studying it. We can never say never."
Argentina's economic problems have escalated in recent months, and the International Monetary Fund held back $1.3-billion in aid after the nation could not meet budget deficit targets. Estimates show that about 2,000 Argentines are pushed into poverty each day, with about 14 million of the nation's 36 million residents now living at or below the poverty line.
Argentina is one of the foremost South American nations in terms of the quality of its Thoroughbred breeding and racing programs.
