01 The Hour
New Year
1 to 3 January 1990. Buenos Aires. Reconstructed to the day, and the day is disputed.
The measure arrived over the turn of the year, when the counters were shut anyway.
Time deposits above one million australes, about 555 United States dollars, would not be repaid in australes. From that sum upwards the financial institutions were to honour them by handing over External Bonds 89, a public security repayable in full in ten years.
Most of the deposits it caught were seven day or thirty day placements. Money put away for a month at most came back as a claim on 1999.
02 The Sequence
Dec 1989 Work on the plan began at the economy ministry in December, during a second episode of hyperinflation. Thirty day deposits were being placed at rates of four hundred per cent, and a great part of the money in the banks was transaction money rather than savings.
1 Jan 1990 The economy minister announced that time deposits exceeding one million australes would be exchanged for public debt securities, repaid in full at ten years. One account dates the implementation to the last working day of the old year.
2 Jan 1990 The plan came into effect, on the account of a fact checking organisation that reconstructed the chronology afterwards.
3 Jan 1990 The date the decree itself carries, as cited by a later decree of the same government. Decree 36 of 1990, a decree of necessity and urgency. The official summary of it runs: financial institutions are to honour their austral time deposit obligations by the delivery of External Bonds 89, those bonds also being used to exchange securities of the internal public debt.
3 Jan 1990 The operative line as quoted from the decree: the repayment that the financial entities must make to the holders of deposits, where it exceeds one million australes, shall be made from that sum onwards in External Bonds 1989. The swap was compulsory and the holders received a ten year bond.
To 23 Jan 1990 A later study quotes a former president of the central bank, who took office on 23 January 1990, as saying that successive decrees issued before his appointment had excluded 57 per cent of what had been taken, so that the banks had to pay out 1,457 million dollars, equivalent to 93 per cent of the monetary base of December 1989, and that only half of the planned issue of External Bonds 1989 would be exchanged for deposits.
29 Mar 1990 Decree 593, reciting Decree 36 of 3 January 1990, authorised bearer securities in australes called Bonds of Investment and Growth, up to one and a half trillion australes. While the sheets were being printed the central bank could issue certificates representing the securities, to be exchanged in due course for the definitive ones.
1990 to Jan 1991 The measure was taken to the courts and upheld, with the Supreme Court also holding that it could properly be made by a decree of necessity and urgency. Inflation rose again during 1990, and less than a year after the plan was launched the economy minister left office.
03 The Hidden Dependency
Everything written about this measure is written about the decree. The number that decided what it actually did is in the decrees that came after it.
Fifty seven per cent of what had been taken was excluded again within three weeks, by instruments issued one after another. The banks had to find 1,457 million dollars to meet the exclusions, a sum put at 93 per cent of the monetary base of the month before. Half the bond issue the plan had been built around was never swapped for a deposit at all.
The measure was written in one decree and unwritten in the ones that followed. Which depositor was caught and which was released was settled in that second set of documents, and they are not the ones anybody reads.
The measure was written in one decree and unwritten in the ones that followed.
04 What Still Worked
The First Million
The swap applied from one million australes onwards. Below that line a deposit was repaid as a deposit, which in dollars of the day meant the first 555 came back as money.
The Exclusions
For the holders who fell inside them, the exclusions worked exactly as a release. Fifty seven per cent of the amount taken came back out, and the banks paid it in dollars.
The Interim Certificate
Written into the March decree, a provision for the gap between a decision and a printed sheet: while the plates were being run, the central bank could issue certificates standing for the securities, exchangeable later for the definitive ones.
05 Contested
Contested December 1989 to January 1990
Four accounts, four dates, for one measure.
A Buenos Aires business daily says it was implemented on the last working day of the year, and that the minister announced it on 1 January 1990. A fact checking organisation says it came into force on 2 January. A later decree of the same government cites it as Decree 36 of 3 January 1990. A financial news service says only that work began in December and it was decreed in January. The issue carries all four, in order, and resolves none of them.
06 The Pattern Library
1 When one retail withdrawal channel closes or fails, demand concentrates on whichever channel is left open, and the capacity of that channel sets what a depositor can obtain.
Observed: Northern Rock 2007, Cyprus 2013, India 2016, Greece 2015, United States 1933, Argentina 2001, Lebanon 2019, Worldpay 2026, TSB 2018, Afghanistan 2021, Nigeria 2023.
2 A currency replacement can require physical work on every unit of the estate before the new money can circulate, whether a modification to each cash dispensing machine or a stamp affixed to each note, so the changeover proceeds piece by piece rather than all at once.
Observed: India 2016, Czechoslovakia 1993.
3 Withdrawal limits imposed on a domestic banking system can be written to exempt cards issued outside it, so one machine dispenses under two rules according to where the card was issued.
Observed: Greece 2015.
4 Domestic payment and deposit channels can continue operating while cross-border payment routes fail, with the central bank standing in as the intermediary for payments to and from the country.
Observed: Iceland 2008, Germany 1931.
5 When the institutions that convert payment instruments into cash are closed, wages and checks already received cannot be spent, and merchants and carriers extend their own credit in place of the missing conversion.
Observed: United States 1933.
6 A public employer short of the national currency can pay wages in an instrument it issues itself, which then circulates alongside the currency it stands in for.
Observed: Argentina 2001.
7 Withdrawal restrictions can be imposed by individual institutions and their trade association rather than by statute, so the limit differs from bank to bank and no law governs it.
Observed: Lebanon 2019.
8 A cash withdrawal ceiling is paid only in the denominations the machine is permitted to hold, so a ceiling and a denomination rule set together decide how many notes a withdrawal is, and a ceiling has to be raised alongside the denominations that pay it when the existing notes no longer carry it.
Observed: Zimbabwe 2008, Nigeria 2023, Venezuela 2018.
9 A payment outage can hit card authorisation and merchant funding as separate faults, so acceptance at the terminal is restored while the money owed to the merchant arrives a day late under its own incident notice.
Observed: Worldpay 2026.
10 A retailer that loses electricity can go on trading by taking cash and rationing goods by hand, so the counter outlasts the checkout system that normally prices and settles the basket.
Observed: Texas 2021.
11 A systems migration can leave account records readable but wrong, including presenting one customer's account to another, so a working login is no guarantee that the balance on the screen belongs to the person reading it.
Observed: TSB 2018.
12 The size of a card processing failure can be counted twice, once on first attempts and once after the same card was presented again, and the second count can be about half the first, so part of the recovery runs through the cardholder at the till.
Observed: Visa Europe 2018.
13 A restriction on access to money can be written by purpose as well as by amount, so a balance that cannot be drawn in general becomes payable when it is used for wages, taxes or relief, and the test applied is what the money is for.
Observed: Germany 1931, Brazil 1990.
14 A deposit freeze can be paired with a transferable certificate issued against the frozen balance, so the deposit becomes a claim that can be sold before it is released, at a price the market sets rather than its face value.
Observed: Ecuador 1999, Argentina 2002.
15 A per head issue of a new currency can be distributed through the administration that issues food rations rather than through the banks, so the ration card is the proof of entitlement and the banks are used to collect the old money rather than to pay out the new.
Observed: Germany 1948.
16 When the persons under sanction become the governing institutions of a country, the prohibition reaches ordinary payments that merely touch the state, and access is restored by successive general licences written by activity, so what decides whether a payment can be made is which licence it falls under.
Observed: Afghanistan 2021.
17 One foreign currency held in one banking system can carry two prices at once, according to whether a balance was credited before or after the date the restrictions began, so the older money converts only at a rate the authority names.
Observed: Lebanon 2019.
18 A payment abroad can be made conditional on prior approval by a committee working to a ceiling set for the whole country each day, so what a firm can pay turns on the capacity of the approval process rather than on the balance in its account.
Observed: Greece 2015.
19 Scarce foreign exchange can be rationed through the commercial banks under published guidelines, with the central bank selling only the net requirement at a daily auction and checking compliance through reporting after the fact rather than approving each payment in advance.
Observed: Iceland 2008.
20 A payment instrument issued by a bank in a country under strain can be valid and unusable at the same time, because the counterparty abroad requires a second bank to confirm it, so the trade stops at the confirmation rather than at the instrument.
Observed: Sri Lanka 2022.
21 Notes of a single currency can trade against one another at a discount according to denomination, so the same sum is worth more or less depending on which note it is held in.
Observed: Iraq 2003.
22 A compulsory conversion of deposits can be narrowed by further instruments after it is already in force, so what the measure finally takes is settled by the exceptions rather than by the decree that announced it.
Observed: Argentina 1990.
Changed today: No existing entry gained a case. Entry 14 was considered and withheld, because the sources used here do not establish a price at which the bond delivered in place of the deposit changed hands. Entry 22 added, on a compulsory conversion narrowed by the instruments issued after it.