A potentially minor issue that could turn into a crisis in Argentina:
An American judge has frozen all property held in the U.S. by Argentina's central bank, saying some or maybe all of that money rightfully belongs to corporations that are owed billions of dollars by that country's government.
U.S. District Court Judge Thomas Griesa signed the order Monday in New York. The court made the order public Wednesday.
The amount of money involved still isn't clear because lawyers in the case have yet to tally how much money the bank has deposited in the U.S., but the court has authorized the creditors to attach as much as $3.1-billion (U.S.) in Argentina's assets.
Judge Griesa issued the order at the request of two investment firms, EM Ltd. and NML Capital Ltd., which were among the creditors owed billions of dollars from Argentina's default on $95-billion in bonds in 2001.
In the past, they have argued that Argentina's central bank is an independent institution, not a state organ, and as such cannot be raided by the country's creditors.
Argentine Economy Minister Amado Boudou announced Tuesday that at least one government account at the central bank had been seized, but said the dollar amount was relatively small – between $1.7-million $15-million.
The attachment order comes amid a fight over whether the government of Argentina's president, Cristina Fernandez, can tap central bank reserves to pay off national debt.
Argentina is going through a financial crisis, unrelated to this court case, and it's not clear if this court ruling is going to create an even bigger crisis. It's possible that Argentina would have to completely withdraw all ownership of American assets and carry out transactions through other central banks. Tags: Latin America