The Argentine financial crisis in 2000, and the collapse of
the country's economy in 2001 and 2002, have shaken the
international financial community and raised questions about
the architecture of the international financial system.
As a result of the crisis, some foreign banks with branches,
subsidiaries or affiliates in Argentina have been forced to
make substantial write-offs. Foreign holders of Argentine
sovereign debt have also been forced to accept write-offs as
the government has in effect imposed a low (about 34%) net
present value exchange offer on more than $100 billion in debt,
the largest such exchange in history. Foreign creditors of
other governments also fear that the Argentine rescheduling
sets a dangerous precedent, and the role of the International
Monetary Fund (IMF) in Argentina, both before and after the
crisis, has been questioned.
One issue that has received little attention is the capital
flight from Argentina in recent years, which...