Debates around the creation of the Central Bank of Argentina

FLORENCIA SEMBER

Tokyo

Seminario; Post Keynesian Seminar; 2012

Meiji University

The purpose of this article is to show some unknown aspects of the debates around the creation of the Argentine Central Bank. The main participants in this debate were the Argentine economist Raul Prebisch, which later would be famous because of his center-periphery theory and the declining terms of trade. The other participant was Sir Otto Niemeyer, who worked at the bank of England and headed a mission to Argentina. At that time, Great Britain had strong ties with Argentina, and the British governments and companies had strong interests in the country. This is not an isolated case: the 1920s and 1930s was the period of the emergence of technocrats and foreign advisors had a very important participation in the creation in Latin American central banks. The research was undertaken in an attempt to explain the fact that during the second half of the 30s, contrary to what happened in other Latin American countries, the central bank of Argentina was able to apply interesting anti-cyclical policies. This was possible because the bank has available many instruments that allowed doing so, as a result of Prebisch's modification of Niemeyer initial project. The article shows that after Niemeyer's visit, intense discussions between officials of the Bank of England and Prebisch began. The main points of disagreement were the visions about the future of the gold standard and the exchange policy, the composition and the instruments of the central bank, and the revaluation of the gold stock and its use. We conclude that Niemeyer's project reflected what was called the "treasury view": he had a deep fear of deflation and of fiscal deficit. Prebisch, on the contrary, had a better knowledge of the Argentine economic reality and an interest to keep a certain degree of autonomy in monetary policy.