Immediate Liquidity Window in Argentina’s Financial Market Expands
In order to reduce interest rates, the government provides banks with additional funds once more.
The Central Bank of the Argentine Republic (BCRA) has eased conditions for financial entities to sell securities, introducing an 'immediate liquidity' window starting next week. This move is aimed at making it easier for banks to manage pesos, fund themselves, and return the money on the same day.
The BCRA has opened a "wheel in the market" in recent weeks, where banks can take money in the morning and return it in the afternoon at a much lower rate, as it is intraday liquidity. This measure is a response to the financial institutions' claims, raised through the four chambers of the sector prior to the disarmament of LEFI. Banks celebrate the measure, considering it an 'improvement'.
The immediate liquidity window is an option for banks to sell securities to the Central Bank at market price with a small penalty. The BCRA will modify the schedule for offering immediate liquidity operations starting Monday. The new schedule allows the loading of titles for sale on the previous business day between 7:00 PM and 8:30 PM, and the possibility of loading operations on the same liquidation day between 8:30 AM and 9:30 AM.
This expansion of the immediate liquidity window comes amid broader financial pressure, with inflation remaining extremely high, the exchange rate volatile, and expectations for further devaluation widespread. These factors amplify liquidity risks, as banks and depositors may prefer holding dollars or other assets perceived as safer, further draining peso liquidity from the system.
The BCRA's responsibility lies in the emission of money and control of the monetary policy of the country. In the past, the BCRA has relied on a range of tools to manage liquidity, including providing short-term liquidity options, repo transactions, and the use of special bonds (e.g., BOPREAL series) for absorbing or providing pesos or dollars.
However, recent measures have tightened the immediate liquidity environment. As of July 7, 2025, the BCRA announced the termination of all remaining liquidity options in agreement with financial institutions. This move effectively closed a key channel through which banks could access short-term liquidity from the Central Bank, potentially tightening day-to-day funding conditions for financial institutions.
The BCRA has also recently auctioned BOPREAL Series 3 bonds, raising USD 491 million to absorb liquidity in the system. While BOPREAL bonds have been used as a sterilization tool (to withdraw liquidity), their effectiveness as a true “liquidity window” is limited, as they are not designed to provide immediate, temporary cash to banks facing short-term shortages.
Interest rates remain high (80% annual percentage rate), reflecting both tight monetary policy and the fight against inflation. High rates can further strain banks’ immediate liquidity positions, especially if access to Central Bank liquidity options is restricted.
| Mechanism | Status (July 2025) | Impact on Liquidity | |--------------------------|-------------------------|----------------------------------| | Liquidity options | Terminated[5] | Reduces immediate liquidity access for banks | | BOPREAL bonds | Active (used for sterilization)[5] | Absorbs liquidity but does not provide immediate funding | | Monetary policy rate | Very high (80% APR)[5] | Increases cost of funding, tightens liquidity conditions | | Immediate Liquidity Window | Active (starting next week) | Provides banks with intraday liquidity at a lower rate |
The overall effect of these measures is a less flexible, more constrained immediate liquidity environment for Argentina’s financial sector. However, the introduction of the immediate liquidity window represents a step towards alleviating some of the pressure on banks, providing them with a tool to manage their daily cash flows more effectively.
Banks in Argentina have welcomed the introduction of the immediate liquidity window by the Central Bank of the Argentine Republic (BCRA), as it offers them an option to sell securities to the Central Bank at market price with a small penalty, thus improving their ability to manage their daily cash flows. In the context of Peronism, this move can be seen as a response to the financial institutions' claims and a significant step towards alleviating the pressure on businesses that rely on the financial sector for their day-to-day operations.
