Radical reforms at the Argentinean Central Bank

By Rick Rowden

Supporters say the changes will help Argentina address its diminishing fiscal and trade surpluses in the short term. But more importantly, it will allow for greater financial stability and the use of incentives and disincentives to steer investment capital and loans toward businesses and projects that increase jobs and boost domestic production. Critics say the reforms will lead to over-regulation that will constrain finance, and worry that the government will go too far with new spending.

The changes break a host of taboos in the dominant school of monetarism in neoclassical economics and conservative policy circles -- a bold effort to show that central banks can play more proactive roles by providing credit to promote productive investment and job creation, and doing so with an eye to ensuring greater socioeconomic equality.

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