Bank Crisis Deepens As Argentines
Take To Streets

CBC News

BUENOS AIRES - Argentine officials were bracing for a new run on the banks late Friday, after a top court ruled the government's freeze on savings accounts is unconstitutional.
Argentinian President Eduardo DuhaldeThe government immediately declared next Monday and Tuesday will be bank holidays a move that's sure to further infuriate Argentinians who've seen the value of their savings halved in the past two weeks by a plummeting peso.
In a wave of panic withdrawals late last fall, $1 billion US left the system in just one day, plunging the economically troubled nation even further into recession. That run forced then-president Fernando de la Rua to impose the bank freeze. It led to massive, often violent, street protests that left 27 people dead and forced de le Rua from power.
New protests broke out around the country Friday, fueled by popular rage at current President Eduardo Duhalde's inability to shake the country out of recession, and live up to his promise to ease the hated banking restrictions.
But what Duhalde had seemed reluctant to do, the Supreme Court did for him Friday, ruling six to three against the freeze. And suddenly, it was the bankers who were panicking: Analysts said Friday the country's banks already teetering under four years of recession simply don't have enough money to repay all their customers and could face ruin, sending the country even deeper into recession.
Later Friday, Duhalde the country's fifth president since mid-December said he disagreed with the ruling. Legal experts were still wrangling Friday over its meaning, with some contending that it applies only to the five original plaintiffs. Most though, said it freed the money of all depositors.
Banks have been further weakened in recent weeks by Duhalde's decisions to float the peso, traditionally pegged to the U.S. dollar, and default on Argentina's public debt.
Those decisions have done little to stem the economic downturn. But they have angered and alienated foreign investors. The International Monetary Fund has said no aid package will be put together for the country until Duhalde comes up with a sustainable economic plan.
On Saturday he was to have presented those reforms, which were expected to strike a delicate balance between appeasing an angry populace with tax cuts, and foreign investors with a realistic debt repayment plan.
Duhalde postponed that unveiling late Friday, after the court's ruling.
Written by CBC News Online staff

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