Friday
August 1, 2014
Saturday, July 12, 2014

It’s not all about him

The bottom line of legislative activity should always focus on what laws are being passed rather than on who is passing them, something often forgotten — not least on Thursday, when most media highlighted the absence of indicted Vice-President Amado Boudou from the helm of the Senate session rather than the banking bill approved. When Upper House Majority Leader Miguel Ángel Pichetto (Victory Front-Río Negro) described this bill as “a measure of great institutional significance,” this was widely seen as a pathetic bid to divert attention from the Boudou scandal but in fact it was the other way around — Boudou’s absence that day was but a very minor footnote in his current legal woes and political isolation while the bill is potentially transformational, as we shall see. It could even be argued that Boudou’s absence was technically correct since Thursday found him not as the vice-president who is formally expected to head Senate sessions but acting president during the illness of President Cristina Fernández de Kirchner but it would be obtuse to pursue this argument because this would be ignoring both the scale of the Boudou controversy and the importance of the banking legislation.

The bill to grant legal immunity to foreign central banks is a major step towards transforming the base of Central Bank reserves from strictly dollars, as hitherto, to a currency basket — already starting this month with the injection of Chinese yuans to the tune of some eight billion dollars to finance Patagonian hydro-electric dams in the context of Chinese President Xi Jinping’s visit next weekend. This is not a free gift since the Central Bank will have to deposit the peso equivalent (at the official exchange rate) in its Chinese counterpart but, comparing world demand for the yuan and for the peso, exchange is definitely no robbery here — indeed Central Bank reserves stand to receive a significant boost. This bill also needs to be seen against the backdrop of the upcoming BRICS summit’s plan to create a development bank with reserves of 100 billion dollars (41 billion of which are to come from China) as a kind of parallel emerging market alternative to the International Monetary Fund or the World Bank — a new Bretton Woods seven decades later (even if it will take rather more than 0.14 percent of the world economy to transform its monetary base)?

So why is everybody so obsessed with a has-been like Boudou and his petty minting scandals when the world’s entire monetary future could be in the process of being redefined?

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