"I am convinced that it is necessary to coordinate economic policy," Marco del Pont said. "I believe in the operating autonomy of the central bank but I don't think it can be independent from the whole of the nation's economic policies," she said."We will propose a coordination just like what's done in all the civilized countries on the planet,"
Sounds like an end to independence to me. Realistically, there will always be coordination between the central bank and a government. This can take the form of regulation and communication. Or, it could be coordination like with the Fed where there is a dual objective function. What is always the key question for central banks is whether they place full employment ahead of price stability. In the case of Argentina, will the central bank allow for higher inflation to help achieve full employment or will the bank allow price inflation which will reduce the real value of outstanding debt.
Central bank creditability takes time and requires evidence from the behavior of the central banker. We have no evidence of intentions with the current central bank and the circumstances surrounding her appointment do not bode well for price stability. It is likely reserves will be used to pay-down debt. On the surface, this may look to make sense, but the problem is that it sets a bad precedent.
Would you want to give your money to this country under the expectation that prices will be stable and your loan will be repaid?
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