Leliq's ball already exceeds all private fixed times

With the demand for frozen credit and a central bank offering rates higher than 60% from the Leliq, banks have placed in these letters more than all the fixed conditions in the private sector pesos. The data illustrate, on the one hand, the financial business model in the current context; and on the other, the magnitude of the snowball created by the monetary agency and that no one knows how it will be disarmed.

The latest data from the BCRA show that as of August 2, the private sector term deposit stock had risen to 1,264,763 million pesos, while the Leliqs stock was rising the same day at $ 1,294,491 million. So, one could say that every peso that banks have captured from companies and families, has invested in central bank liquidity bills.

Meanwhile, if Leliq's stock is compared to all fixed conditions in pesos, including those in the public sector, the letters represent nearly 81% of the $ 1,600,721 million placed in banks.

Economists agree that the situation results from a lack of credit demand due to high interest rates and a contractual monetary policy, which offers a guaranteed profitability scenario.

Of course, including demand deposits, which amount to an additional $ 1,271 billion, and the $ 20,726 million in fixed terms related to UVA, the weight of Leliqs decreases in the balance sheet of the bank, even if he is always high.

The July Monetary Report shows that at the end of this month, BCRA's liquidity bills accounted for 40.6% of total deposits, of which just over a quarter were intended to incorporate reserve requirements and 75% of total deposits. Remaining% were simply purchased. as an investment.

Credit application, extinguished

"The fact that Leliqs' private futures are the bulk of the debt is related to the liquidity environment of the banks, it is linked to the fall of credit in the economy, because of the low interest rates. high interest in the market, "says Federico Furiase, director of the Eco Go study. To the extent that credit demand is picking up and interest rates start to fall, he adds, banks will start to leave less money on Leliqs and reactivate credit.

The Cesur economist, Amilcar Collante, argues that the fact that there are more letters in the banks than private fixed terms is an interesting fact, but understandable given the compound interest generated by the Leliq. "The stock is updated weekly, which corresponds to interest on interest, and the effective rate if the BCRA renews itself each week has much higher growth than a fixed term, which has a rate monthly minimum, "he calculates Sticky

For financial badyst Christian Buteler, it was necessary to expect the station's stock of letters to exceed the amount of private fixed terms. "The government, whether through the Treasury or the Central Bank, is virtually the only one to take money and it is they who are now absorbing the pesos of the banks," notes the economist.

In addition, he explains that, while loans are falling monthly in real terms – "something logical with these rates," he said, "and that the economy is in recession, banks do not have not many alternatives or tools to place their money.

According to Collante, this situation is advantageous for banks in the structure of banks, because they can show that they are profitable, but not in the traditional system of the financial system of making monetary mediation between depositors and borrowers. "Profitability is only made by placing the Lelliqs in the BCRA, which is not very healthy from a banking point of view.They generate profits but not with the usual mechanism", says -he.

The banks know that the activity, in the background, is to lend to private companies, but they see in this situation an ideal time to continue to obtain profitability and limit the risk, in a context of growing crime..

"From the point of view of the solvency of the banks, I do not see any problem as long as the Central Bank complies with the instrument, paying it on time and in form, as it did and as I do not doubt that she will continue to do so, "Buteler said.

Private banks account for about 65 percent of Leliqs' total stock, with equal participation between domestic and foreign capital, according to June data. Public banks, on the other hand, direct their liquidity to finance the state: they concentrate almost 75% of the sovereign bonds that the financial system has in its portfolio.

Placing your pesos in Leliqs is a very profitable business for banks because it is a transaction with minimal operating costs because you do not need a large structure for these operations. .

How this ball is disbadembled

On the other hand, the task of the head of the central bank, Guido Sandleris, to disarm this snowball does not seem simple. This is in fact one of the Achilles' heels of the government of Mauricio Macri and that is why the candidate for the presidency of the Front of all, Alberto Fernández, has focused on what is paid in the interest of Leliqs election campaign.

"Disarmament is something no one knows yet how to do, and the BCRA is not comfortable with this situation – if it could disarm it, it would disarm it." Last year, the Lebacs, who were the predecessors of the Leliq, were one of the big problems That triggered the fluctuation of the exchange rate.They know, in the BCRA, that it will be a big problem at some point "Buteler said.

For Martín Kalos, director of EPyCA Consulrores, the logic of disarming remains the same, that is to say, to liquidate the debt on inflation. "In the end, lower the interest rate in the event of a fall in inflation, which allows to generate a process of reduction of the Leliq, to ​​emit them, to pay them effectively and not to have to undergo the rollover high they need today not to generate broadcast, "he says.

In other words, Kalos adds: "de-sanitize, so to speak, the reverse process to sterilize and release at least a portion of each expiration". Of course, for the essential condition to have lowered inflation "to such a level that a little more emission does not compromise macroeconomic stability, and for that, there are still years," he said. -he declares.

For Furiase, the departure of the Leliq will also take a lot of time and the key is the "trust". This political uncertainty is raised, there is a monetary and fiscal consistency and this helps to lower the interest rate is a necessary step to disable the bomb and prevent it from exploding..

Thus, adds the economist of Eco Go, if the political uncertainty disappeared, there would remain a margin not only to lower the real rate, but also so that the demand for money absorbs some of the disarmament of Leliks.

In this scenario, and with monetary and fiscal coherence, the country risk could be reduced, the Treasury would have a margin to place the debt in pesos, non-transferable letters held by the BCRA before the transfer and a margin to disarm the Leliqs with a neutral monetary effect, Furiase badysis, although It is very long and as long as political and economic uncertainty is lifted.

The financial badyst Buteler believes that no options for disarming the Leliqs stock do not please, and lists: a big devaluation like last year, liquefying them guaranteed that it "pbades the hand" or "Even the madness of the Bonex plan would be the worst way to solve this problem," he said.

Sticky also badyzes the different variants to perform to disarm this problem. "I do not know how the candidates say it, but there are two extremes: or what would be the healthiest thing is that the high inflation goes down, the demand for money increases and each time it has to be renewed at a lower rate, for what price? " what must be a very strong confidence shock and a clear signal from the policy, "he explains.

By fair means or foul

In this sense, the candidate who wins the elections should propose a program so credible that it will be achieved in the medium term, not overnight, he adds.

The other solution which, as proposed by Collante, is at the extreme extreme is "for Argentina, with correctives or liquefactions", as he defines it himself. The BCRA has the option of placing a bond on the banks and extending the terms of the Leliq "against another piece of paper".

This variant may scare depositors, the demand for money will fall and inflation itself liquefies the title. "With this or with the devaluation, the problem is liquefied by the bad ones, as was the case with the Lebacs, which were partially liquefied, and another part was canceled with reservations," he says.

In summary, as Buteler explains, Leliq's stock is a problem not only because the rate is above 60%. "They pose a problem with a rate of 60%, 50%, 40% or 30% .This volume of money capitalized weekly in this way is a big problem, even with a rate half as high as today" , to warn.

"It's an elephant in a bazaar where something is going to break in. It's very difficult for him to disarm without breaking something, it would require a growth of money demand, an economic boom for years, Leliq is another monetary base. "Absorbing is not easy," says Buteler.

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