Head of the Central Bank Santiago Bausili laid out the new government’s monetary policy to bank representatives on Wednesday morning, one day after Economy Minister Luis Caputo announced an “economic emergency package” that included a 54% devaluation.

Late on Tuesday, the Central Bank published its “new monetary and exchange rate guidelines” — among them, that the currency would depreciate at 2% per month after Tuesday’s devaluation. In the press release, the Central Bank said that Caputo’s announcements aimed to “reverse the spiral of instability and stagnation affecting the Argentine economy.”

A bank representative present at the meeting told the Herald that the new crawling peg rate would not be fixed because the policy is meant to be temporary. In the meeting, Central Bank representatives claimed that Caputo’s sweeping cuts and devaluation were a necessary first step toward a future “stabilization program.”

The source also said that the administration’s medium-term goal would be to lift the current exchange restrictions, popularly known as the cepo (Spanish for clamp), enforced due to an international reserve scarcity crisis. The Central Bank’s communiqué also stressed the importance of accumulating international reserves, which are now close to negative US$11 billion. The concept was repeated during the meeting with the bank representatives.

Another issue on the table was the Central Bank’s short-duration interest-bearing liabilities — LELIQs and repo operations, which pay in 28 days and one day respectively. President Javier Milei has consistently said that these instruments are one of the country’s main economic problems. In the communiqué, the Central Bank said that the LELIQ rate will remain at 133% and the repo operations will be reduced to 100%.

Representatives explained that the difference between the interest rates is for banks to return to the LELIQs, since they had not been renewing their stock and resorting to repo operations instead. The Treasury would then offer another, more attractive financial instrument.

The Central Bank’s independence from the government was also addressed but as a long-term goal. The representatives considered that, since the Central Bank’s balance sheet has financial instruments issued by the Treasury, independence is not possible at the moment.

The importers’ debt with their providers, which the United States Commerce Chamber in Argentina (AmCham) calculated at over US$55 billion, was also discussed on Wednesday morning. The Central Bank referred to it as a “historical record of inherited commercial debt.”

To address the problem, the Central Bank issued a bond that is subscribed in pesos and paid in US dollars for indebted importers after the meeting. The instrument, called Bonds for the Rebuilding of a Free Argentina (Bopreal, by its Spanish acronym) is exclusively for indebted importers — transactions for which they have received goods and services but failed to pay due to the Central Bank’s restrictions in the currency exchange market.

The Central Bank’s press release also warned that the coming months will be of stagflation, something that Milei has repeated consistently since he won the presidency.