May 21, 2013
Switzerland rejects embargoes on Argentina's reserve deposits
Switzerland’s government rejected a law suit filed by US vulture funds asking to set an embargo on Argentina's assets deposited in the Bank for International Settlements as funds claim the payment of a US$1 billion debt.
The Swiss government’s Federal Council explained in a communiqué that Swiss authorities have nothing to do with the management of assets deposited in the BIS by foreign central banks.
The law suit is part of the numerous ones that Argentina faces on regard the debt default conducted in 2001 –the world’s biggest sovereign debt default in history.
The two US-based funds had bought Argentina’s coupon-bonds at very low prices in order to cash in on the difference in the short term, and refused to accept the 2005 and 2010 debt swap masterminded by Néstor Kirchner in which Argentina won over three-quarters of the owners of defaulted bonds by paying US$0.33 and US$0.50 cents on the dolllar repectively.
As numerous International funds were claiming for Money, in 2004 the government of late President Néstor Kirchner decided that the Central Bank should transfer more than 99 percent of its foreign currency reserves which were about 53 billion dollars to the BIS in Basel.
As the usual average for nations is to deposit between 10 and 15 percent of their reserves in the BIS, Argentina decided to transfer almost all of them as the BIS offers assets immunity so that no third party can set embargoes on them.