News Center

Bondholders seek reserves in Switzerland
Ambito Financiero
January 26, 2010

Rome The bondholders that didn't enter the 2005 debt swap are asking the Bank for International Settlements (BIS) for access to the US$40 billion in reserves that Argentina has deposited in the entity, argued a representative.

Robert Shapiro, co-president of the U.S. working group dedicated to the resolution of Argentina's 2002 default, said that the government is using the BIS, which has its headquarters in Switzerland, to hide money from judicial orders around the world, especially New York Judge Thomas Griesa.

"The President can escape from legal decisions, but she can't degrade and debase an international financial institution to do it," Shapiro said, who also said that "Argentina is using the BIS and abusing its international role in order to evade court judgments in the United States, Italy, Japan, England and France."

The BIS, which acts as a bank for central banks and fosters international monetary and financial cooperation, declined to comment specifically on Shapiro's comments and said the litigation between Argentina and its creditors is an issue for them alone.

Approximately 80% of Argentina's US$48 billion in reserves is at the BIS, according to IMF figures. However, average figure for other countries is 4 percent.

Shapiro said he was taking advantage of a visit to Italy, where most of the holders of so-called "tango bonds" are concentrated, to urge the Italian central bank and Treasury officials to pressure the BIS into making Argentina reduce its reserves with the bank. He will take the same message to London, Paris and Berlin. "Italian pensioners ask, 'where is my money?', and the response is 'it's across the border in Switzerland," Shapiro said. "The Italian government should do something. We want the BIS to tell Argentina that it can only keep the funds that it requires for the legitimate BIS matters," said Shapiro, ex-economic advisor to former U.S. President Bill Clinton.

Benefit

He even argued that "it is likely they have mixed what might be technical reserves with other government assets," and added that the government had begun closing its foreign bank accounts starting in 2001, in preparation for the default.

Shapiro said there was no reason for those who rejected the first bond swap to accept this one, which has more unfavorable terms. "The acceptance rate is irrelevant," he said. "That would remove the court rulings for those whose bonds are being paid, but not for the others," he said, and added that the swap would mainly benefit "vulture funds" which bought cheap bonds on the secondary market.

U.S. Government
Takes Action

Click here to view letters by the Administration and Members of Congress on Argentina's debt and economic policies.

The Debt and Europe

Click Here To Read More

ATFA Member Spotlight

National Taxpayer's Union

Open Letter to the U.S. House of Representatives: Protect Taxpayers from Judgment-Evading Nations

Click here to view other ATFA member activity

Join Us
Show your support for ATFA and our work regarding debt default by joining our growing list of supporters.

Tell Your Friends
Do you have friends or colleagues who would be interested in supporting ATFA? Send them an invitation to this site by clicking here.