Playpen


Corralito is the official name of the economic measures adopted in Argentina at the end of 2001 by the Minister of Economy, Domingo Cavallo, in order to stop a bank run, which remained in force for a year. The corralito almost completely froze bank accounts and prohibited withdrawals from accounts denominated in US dollars.

The word corralito is the diminutive form of corral, which means “corral, animal pen, enclosure”; The diminutive is used in the sense of “small enclosure” and also “a playground”. This expressive name alludes to the restrictions imposed by the measure. The term was coined by the journalist Antonio Laje.

In 2001, Argentina was in the midst of a crisis: highly indebted, with an economy in complete stagnation (almost three years of recession), and the exchange rate was fixed at one US dollar per Argentine peso by law, which made exports non-competitive and effectively deprived the State of having an independent monetary policy. Many Argentines, but especially companies, fearing economic collapse and possibly devaluation, were converting pesos into dollars and withdrawing them from banks in large amounts, usually transferring them to foreign accounts (capital flight).

On December 1, 2001, in order to prevent this drain from destroying the banking system, the government froze all bank accounts, initially for 90 days. Only a small amount of cash was withdrawn weekly (initially 250 Argentine pesos, then 300), and only from accounts denominated in pesos. Withdrawals from accounts denominated in US dollars were not allowed, unless the owner agreed to convert the funds to pesos. Operations through credit cards, debit cards, checks and other means of payment could be carried out normally, but the lack of availability of cash caused many problems for the general public and for businesses.

Protest against the banks in 2002. The big sign says “Thieving banks – return our dollars.”

The corralito caused an immediate setback in the government. Even more people began trying to withdraw their money from banks, with many ending up in court fighting for their right to have their funds (and was granted that right from time to time).