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Welcome to Argentina

Argentina is in a constant state of crisis, but at the same time its citizens enjoy a higher level of well-being than in many Latin American countries. Why the country has earned the title of "chronic default" is explained in the material.

In the "Welcome" section, we travel to different countries to find out how the economy, digitalisation and citizens' well-being are faring. Today we are going to Argentina.

A quick summary

Argentina is the second largest country in South America in terms of area (after Brazil) and the third largest in terms of population (after Brazil and Colombia). Its neighbours are Chile to the west, Bolivia and Paraguay to the north, and Brazil and Uruguay to the north-east.

With an area of 2,780,000 square kilometres, it overtakes Kazakhstan (2,725,000 square kilometres) to become the 8th largest country in the world in terms of land area. Its varied topography (the Andes in the west, the Atlantic Ocean in the east) means that its subsoil is rich in mineral resources.


Argentina is an agricultural-industrial country.

It is the world's fourth-largest oil producer and is able to meet its own needs without recourse to imports.

The country's traditional but specific industry, for which it is known throughout the world, is the meat industry. Argentina is one of the world's leading beef producers. The country's second and third largest food industries are vegetable oil production and wine production.

Unlike other Latin American countries, Argentina is completely self-sufficient in food and exports agricultural products (50 percent of export earnings come from meat). This is despite the fact that agriculture employs only 2% of the working population.

A little more about the Argentines and meat:

6th largest cattle population in the world;
5th in the world in per capita meat production;
1st in the world in meat consumption.

Argentina became a leading supplier of agricultural products at the end of the 19th century, the most successful and prosperous period in the country's history. At the time, it was overtaking many European countries in terms of standard of living, and at the same time, it was full of emigrants with capital and an idea of banking. This was the beginning of the Argentine banking system.

Membership of Unions and Associations

UN (United Nations), IMF (International Monetary Fund), OAS (Organisation of American States), WTO (World Trade Organisation), G20 (Club of Governments and central bank governors of the most developed and developing countries), MERCOSUR (Southern Cone Common Market).

Chronic default

In addition to leading the world in meat consumption and production, Argentina also leads the world in the number of defaults - by 2020, the country will have defaulted nine times, earning it a global diagnosis of "chronic default".

In the 21st century alone, the country has experienced three defaults - in 2001, 2014, and 2020.

After a severe economic crisis in 1998, Argentina defaulted on $95bn of foreign debt at the end of 2001, immediately followed by a banking crisis in 2002. People made emergency withdrawals of pesos and converted them into dollars, and when banks froze accounts, riots broke out. It was the worst crisis in the country's history and led to 40 percent inflation.

The country was in recession until 2014. In the same year, there was another default - the authorities refused to pay foreign debt. By the way, the process for this debt has been going on since 2001 - 13 years.

Well, and as a cherry on the cake, 2020 also passed under the banner of default. The country's president, Alberto Fernandez, could not agree on rescheduling the foreign debt at a time when the whole world was in the throes of the coronavirus crisis. The amount at stake was $65 billion. As a result, the payment terms were adjusted with some resources. Did this affect the country's economic situation? No. Argentina was in dire straits and remained so.

The banking system

The development of the Argentine banking system was closely linked to the development of the economy and international trade. As a result, foreign banks began to operate in the country.

Banking history begins in 1881 with the creation of the Banco de la Nación Argentina (Bank of the Argentine Nation), which acted as the central bank until 1935, issuing the national currency and being the largest bank in the country.

In 1935, the Central Bank of Argentina (Banco Central de la Republica Argentina) assumed the role of central bank, which it still performs today.

The first private bank was opened in Buenos Aires in 1886. Its original name was Banco Francés del Río de la Plata, now BBVA Banco Frances. By 1994, there were more than 200 banks operating in the country.

When things were going well and the Argentine economy was outpacing the rest of the world, the banking system developed in the image and likeness of the leading Western countries. The emphasis was on serving the domestic market.

In 1990, Argentina implemented liberal reforms and opened the domestic market to international capital. On the one hand, this gave a boost to economic development by reducing state control over the economy. On the other hand, it became the starting point of a severe economic crisis, with bonuses in the form of hyperinflation, unemployment, and the closure of more than half of the country's banks (by early 2000, there were about 90 banks left in the country). And yes, the country has been in crisis for more than 20 years.

Today, Argentina's banking system functions not because of its historical legacy, but because of the results of crisis management.

The country's banking system in 2023 looks like this: the central bank issues the national currency and sets the rules of operation for the second tier of banks, which includes all public and private banks.

Commercial banks are divided into four categories:

  • Argentina's major public and private banks;
  • Branches of foreign banking groups;
  • medium and small banks (private and cooperative);
  • Regional banks of local governments.

Of the total, 15 banks are state-owned and more than 80 are private commercial banks.

The national statistics office, INDEC, puts the figure at $250 billion - that's how much Argentines keep in safe-deposit boxes, in foreign accounts and simply under their mattresses, outside the national financial system. And this amount is six times the current reserves of the Central Bank.  

In addition, after a series of tough reforms, the country's entire business sector has come under scrutiny. Exporters are obliged to sell their foreign currency earnings on the domestic market, importers must obtain a permit to conduct transactions, and the population itself pays two taxes to buy foreign currency for tourism purposes (and has a limit on withdrawals - $200 per month). These capital controls have given rise to a black market and parallel foreign exchange markets, mainly using securities.

Despite record inflation (53.8% in 2019) and a protracted crisis, the wealth of residents is higher than in other Latin American countries. The country has a sufficient number of wealthy companies, which are the main users of banking services.


In a market where people have a savings account but no access to bank credit, which accounts for 70% of the banking sector, fintech is still finding fertile ground for growth. Argentina is the third country in the region (after Brazil and Mexico) in terms of the importance of the fintech industry. There are now 330 companies operating here. As the number of companies has grown, so has the number of jobs, helping to solve one of Argentina's most important problems - employment. The main growth in the fintech industry came during the pandemic - the sector grew by 20%.

The Central Bank of Argentina regulates payment service providers (PSPs) and non-financial credit service providers (OPNFCs), while the National Securities Commission regulates the investment vertical, which can include virtual active service providers (PSAVs).

Today, the focus is 100% on the customer and the digitalisation of businesses. Fintech has become the nexus that provides solutions for both sides. According to Mercado Pago, the country's leading fintech and part of Mercado Libre, the number of SMEs using digital payment solutions to grow their business has almost doubled in the last year.

Digital payments are the largest in the market. POS and mPOS payments lead the way, followed by QR code payments. There are now around 30 million CVUs (virtual accounts) in Argentina.

Another statistic: 56% of Argentines use digital channels to manage their personal finances.

Fintech is the most heterogeneous industry in the country. There are startups, digital projects from traditional banks, digital wallets from centralised finance, P2P platforms, and blockchain exchanges.

The main companies in the country developing fintech products:

1. Mercado Pago. This is part of Mercado Libre, whose main activities are: terminals, QR codes, online payments and payment systems.
2. Uala. This year the company announced a new service - the sale of cryptoassets (including bitcoin and ether). Profits can be used to pay for transactions within the platform itself.
3. Pomelo. In one year, the company has gone from being a startup to a major competitor and has been named one of the most promising fintech companies in the world in 2022.
4. Belo. The company is known for issuing a card that offers up to 21% cashback on cryptocurrency purchases.

When it comes to open banking, Argentina is several steps behind Brazil and Mexico regionally, although it has made leaps and bounds in recent years. A good example was the launch of Transfers 3.0, which made Argentina the first country with a fully open digital payments system. There are still many challenges to overcome, and a lack of talent is one of the most pressing.

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