The national government tightens reserve requirements and prepares for a new tug-of-war with the banks.

The Central Bank of the Argentine Republic (BCRA) tightened monetary conditions to an extent unprecedented in the last three decades. The level of bank reserve requirements—the percentage of deposits that banks must immobilize at the Central Bank —reached 50% in current accounts, meaning there is more money currently "locked up" than circulating in the economy.

The official objective is clear: to withdraw excess pesos to prevent them from putting pressure on the dollar, consolidate the drop in inflation, and demonstrate macroeconomic order before the legislative elections . But the measure opens a new battle with banks, which will have to face multi-million-dollar maturities in a scenario of increasingly high interest rates.

According to data from the Central Bank of Argentina (BCRA) and a report by the consulting firm 1816, the current level of reserve requirements has not been seen since 1993. In concrete terms, there are $24.6 trillion immobilized compared to $23.9 trillion in circulation. Furthermore, the monetary authority began recording reserve requirements on a daily basis, rather than monthly, with harsher fines for those who fail to comply.

The pressure was immediately felt on market rates. In a single day, the stock market guarantee rate went from 0% to 140%, reflecting the strong absorption of pesos. The Central Bank itself had to intervene again with repos and simultaneous transactions to provide minimal liquidity to the system.

Next week, $13.7 trillion in peso-denominated debt matures, of which $9.1 trillion is in private hands. With the new daily reserve requirement scheme, uncertainty about rollover is greater. Banks are demanding predictability and warning of the rising costs of financing the Treasury in this context.

The consulting firm Equilibra estimated that the financial cost of the official strategy, with rising rates, already involves up to $2.6 trillion in additional revenue until the elections. According to its calculations, a 90% rollover with rates similar to the recent public procurement processes would represent 0.27% of GDP, an amount comparable to the fiscal cost of the Emergency Disability Law approved by Congress.

At the same time, President Javier Milei reiterated his political stance at the Council of the Americas. " There is no monetary validation of the dollar's rise, therefore there is no transfer to prices ," he stated, ruling out the possibility that exchange rate volatility could lead to a resurgence of inflation.

The president, applauded several times by the business leaders present, called for fewer complaints: "Less crying over rate volatility." With this message, he reaffirmed that the path forward will be to maintain fiscal and monetary discipline, even if it inconveniences banks and sectors accustomed to operating with greater liquidity.

The official strategy is not without risks. Private credit in pesos is already showing signs of slowing, with record real rates and higher delinquency rates on business loans. However, the government is betting that monetary contraction will strengthen exchange rate stability and consolidate a scenario of downward inflation, an essential condition for maintaining the economic and political course.

With maturities looming and reserve requirements at their highest level in 30 years, the upcoming showdown with the banks will be key to confirming whether the government manages to maintain control of the financial front amid the election campaign.