20

ionary monetary policy (“Profiting from virtue”, February 7th). This is incorrect. To better
understand our approach one must recognise that Argentina has had a long history of macroeconomic
instability and fiscal and external imbalances,coach outlet store, which led to periods of high inflation and a highly dollarised
economy.
In our emerging economy the private credit market remains highly segmented and is equivalent to only
12% of GDP, compared with an average of 30% for Latin America, weakening the power of monetary
policy to affect aggregate demand. Argentina’s economy is still cash-intensive, so the power of fiscal and
wage policies to affect demand and expectations is predominant. Therefore,coach outlet online store, it is critical to track the
recent evolution of fiscal and wage policy together with monetary aspects when making judgments about
expansionary policies.
Furthermore, to help weather the international financial crisis we are building buffers, such as
accumulating foreign reserves, and making sure our financial system is solvent and highly liquid. The
Central Bank is committed to pursuing a robust monetary policy through the strict control of the growth
of the means of payment.

Monetary aggregates have been growing at diminishing rates since 2004. In fact, private sector M2 is
growing at less than 10%, far below the growth of nominal GDP. This is consistent with the monetary
programme presented every year before Congress and which aims to maintain the equilibrium between
supply and demand in the monetary market. Preventing a new crisis is a priority: it is imperative that we
pursue a dual mandate of monetary and fiscal stability.
Martín Redrado
Governor Central Bank of Argentina
Buenos Aires
Wrong on a rights offering
SIR – When reporting on Rio Tinto’s proposed investment deal with Chinalco, you stated that “alternative
methods of financing, notably a rights offering, would have certainly been dilutive” (“Undermined”,
February 14th). I’ve noticed that Rio’s chairman,coach bags for sale, Paul Skinne