- The Washington Times - Tuesday, April 23, 2002

BUENOS AIRES (AP) A banking holiday shut down equity and foreign exchange markets again yesterday as small protests flared throughout Argentina over a deep economic crisis.
The country's central bank imposed the hiatus Friday as the government of President Eduardo Duhalde wrestled with ways to shore up the tottering banking system.
All foreign exchange and banking transactions remain indefinitely halted as the government draws up an economic plan to stem the outflow of about $100 million a day from the banks.
The program aims to end thousands of successful lawsuits against a partial banking freeze imposed on Dec. 1 by the government of former President Fernando De la Rua.
Those restrictions remain and limit cash withdrawals to about $500 a month, but judges have consistently upheld the right of savers, who have challenged the decision in the courts.
But Mr. Duhalde yesterday repeated warnings that steps must be taken to avoid the collapse of the financial system, now weighed down by a four-year recession.
"We all know the situation: There are many more people who want to withdraw money than there is money in the banks," Mr. Duhalde told reporters.
Late Sunday his government sent a legislative proposal to Congress for reorganizing the government-run banks, a move seen as an attempt to rescue the country's tottering financial system.
It calls for creating the Banco Federal Nacional. The bank would be a merger of Argentina's largest bank, Banco de La Nacion, and the investment bank, Banco de Inversion y Comercio Extranjero.
Separately the government has sent Congress a proposal to oblige most Argentines who win lawsuits for withdrawing money from the banks to accept long-term bonds instead of cash.
Some $60 million remain trapped in deposits because of the banking freeze. But opponents in Congress said they are reluctant to hastily endorse any such plan and demand to see the details.
Sen. Rodolfo Terragno told the local news agency Diarios y Noticias that it would be impossible to act within the 12 or 24 hours that Mr. Duhalde's administration would like.
"This is extortion," he complained.
Meanwhile, depositors returned to the streets of Buenos Aires yesterday. But the protests were small: One group demanding money back from the banks numbered only about 100 in the rainswept gatherings.
Protests were reported elsewhere, including San Juan province in western Argentina.
Around Buenos Aires, meanwhile, many who tried to make ordinary withdrawals from bank machines complained that the banks weren't restocking the machines during the banking holiday.
Last week the Central Bank suspended for 30 days the activities of Scotiabank Quilmes, the country's 11th-largest bank, because of its low level of operating capital and reserves.
Private analysts say that facing similar problems are many of Argentina's banks, in particular the smaller provincial banks, many of which have been privatized over the past decade.
Argentina is experiencing its worst downturn in memory, having defaulted on its $141 billion debt in December and begun a sharp devaluation of the currency in January.

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