On March 29, the Executive branch submitted to the Senate a bill to reform the Organic Charter of the Central Bank (BCRA), which establishes the institution’s mandate for ensuring price stability and prohibits the Bank from financing the national government directly or indirectly. The bill is one of the commitments made by the Finance Ministry to the International Monetary Fund. However, during the IMF’s last review visit in February, it transpired that the organization does not expect the law to be enacted this year.
The bill addresses four elements deemed essential by the government for the independence of the Central Bank. First, it proposes a “multiple mandate” focused on price stability and, less explicitly, on growth and financial health. Secondly, it precludes the BCRA from directly or indirectly financing the national government and its reserves from being used to pay foreign debt obligations.
Third, the bill seeks to prevent temporary appointments of the chairman and board members from being extended indefinitely as has been the case in recent years. Instead it is proposed that the Senate should be considered to have approved appointments if nominations are not rejected after a complete period of ordinary sessions. It also reduces appointment tenures to five years, with the possibility of extension, and would introduce a more demanding removal mechanism that involves the Senate.
Finally, the Finance Ministry proposed modifying the Bank’s decision-making structure, centering this around three main bodies: its Board of Directors, the Monetary Policy Committee and the Institutional Supervision Council. Under this, the Superintendency of Financial and Exchange Institutions would report to the Board of Directors. Also being sought is the annulment of the penal regime corresponding to criminal offences around foreign exchange, with a Penal Code amendment bill also submitted by the Executive branch featuring a chapter on foreign exchange crimes.