BCRA BALANCE SHEET

Assets. Sources of money creation

1. Net External Assets (International Reserves)

The most important item for any central bank. It includes everything the BCRA holds abroad or denominated in foreign currency, net of its foreign-currency liabilities. Key components:

• Gold and foreign currency (net): Physical gold held in vaults plus available foreign currencies (USD, EUR, etc.), net of provisions. During the Convertibility era (1991–2001), this item was required to fully cover the monetary base.
• Foreign exchange valuation effect: Gains or losses recorded when the exchange rate changes and the BCRA's stock of reserves is revalued in pesos.
• Contributions to international agencies: Argentina's quota subscriptions to the IMF and other multilateral organizations, representing claims the BCRA holds against those institutions.
• SDR allocations: When the IMF distributes Special Drawing Rights to member countries (as in 2021), the BCRA records both an asset and an offsetting liability. The net can be positive or negative.
• Obligations with international agencies: Recorded with a negative sign, these are the BCRA's debts to the IMF and other bodies. When large, they reduce or can make net external assets negative.

2. Credit to the Official Sector

Loans from the BCRA to the National Government - the source of monetary financing of the State and one of the most debated items in Argentina's economic history.

• Temporary advances (AT): Direct short-term loans from the BCRA to the Treasury. The Organic Charter limits their size to a percentage of prior-year tax revenues and of the monetary base. In practice they have often been rolled over rather than repaid within the fiscal year.
• Non-transferable Treasury bills (Letras Intransferibles): When the government uses BCRA reserves to pay external debt, it delivers in exchange a 10-year bill that cannot be sold in the market. These are assets of dubious real value. A 2019 law changed their accounting valuation to market value, generating large book losses for the BCRA.
• Public securities: Government bonds held in the BCRA's portfolio. The 2012 reform of the Organic Charter broadened the BCRA's ability to purchase them in the secondary market.

3. Credit to Financial Institutions

Loans the BCRA grants to commercial banks in its role as lender of last resort. In domestic currency, these are rediscounts and advances to banks facing liquidity problems - a line that surged dramatically during the 2001–2002 crisis. In foreign currency, they include dollar loans or net positions in repo operations.

4. Miscellaneous accounts and other assets

BCRA real-estate holdings, accrued interest receivable, and various minor items.

Liabilities & Equity - How the money exists

1. Monetary Base

The primary money creation of the BCRA - 'high-powered money'. It equals:

• Monetary circulation: Banknotes and coins in the economy - both outside the financial system (held by households and businesses) and in bank vaults (part of bank reserves).
• Bank current-account deposits at the BCRA: Bank reserves held in accounts at the BCRA, including mandatory reserve requirements (encajes) and any excess above the minimum.

Monetary Base = Monetary Circulation + Bank current accounts at the BCRA

2. BCRA-Issued Securities (Sterilization)

When the BCRA emits more money than the economy demands, it issues its own short-term instruments to 'absorb' excess pesos and prevent inflationary pressure:

• LELIQs / Liquidity Letters: Short-term remunerated securities sold exclusively to banks. The main sterilization tool between 2018 and 2023; rates reached 133% per annum, generating a compounding interest snowball.
• Passive repos (pases pasivos): Overnight repo operations in which the BCRA borrows pesos from banks promising to return them with interest the following day. Now the primary sterilization instrument.
• BCRA notes: Similar instruments at various maturities.

These instruments carry an interest cost that generates quasi-fiscal losses - losses that eventually translate into additional money creation.

3. Government and Bank Deposits

Deposits held by the National Government at the BCRA act as sterilization: while the funds sit there, they do not circulate in the economy. Also includes funds of financial institutions under BCRA administration (e.g. institutions in liquidation).

4. Net Equity (Patrimonio Neto)

The difference between total assets and total liabilities. In theory it should be positive, but the BCRA has recorded negative net equity during several periods - notably because non-transferable bills were marked down, quasi-fiscal losses from LELIQ interest accumulated, and exchange-rate operations produced losses during periods of exchange-rate lag. A central bank with negative equity can continue operating, but it signals structural financial weakness.