Would You want to See a Corralón Type Economic Measure in Your Country?

[Poker Player]

Sure, a desperate measure taken by a country that became the first in GDP more than 100 years ago and whose disastrous Peronist (communist-like) policies have led to extreme poverty, massive emigration and very high inflation for decades has to be the example to be followed by the rest of the countries of the world.

Perhaps one of the most idiotic ideas to "save the economy" is to take away people's PERSONAL savings in the currency that stabilized the economy....

Yes, together with the idea that if money is needed, the right thing to do is to print more, much more.

Just look at the economic situation of Argentina right now and you have your answer, it has not got better - in fact has arguably got worse - since this policy was enacted.

Of course not. A government that steals so blatantly the only thing it achieves is to drive capital and talent out of the country, sinking it deeper into misery. It was precisely after this that a massive exodus of Argentines took place.

[1715011176]

1715011176

[1715011176]

1715011176

[slapper]

Imagine that people were looking helplessly as their savings were wiped out. Even though the idea behind such a policy seems good for people who are in debt, it smells like a desperate and short-sighted attempt to fix a complicated economic problem. People would never trust the banks again

The so-called reward for people who are in debt is just a band-aid over the real problem, which is bad money management and hard times financially. Such policies could probably make people not trust the financial system in the long run and could even cause capital to leave the country. Instead of taking such harsh actions, it's important to look at and suggest complete, well-thought-out plans

[Ucy]

Corralón was the informal name for the economic measures taken in Argentina at the beginning of 2002 by President Eduardo Duhalde during a bank run in which deposits and debt in dollars were exchanged to local currency at 1.4 per dollar for deposits and 1.0 for debt (this was also called pesificación asimétrica). Previously, the withdrawal of dollars was limited to $250 per week. After the forced exchanged, people no longer had any dollars on the system and those who had savings in US dollars lost 65% of their deposited value.
https://en.m.wikipedia.org/wiki/Corral%C3%B3n

What are your thoughts on the quote above if your government implemented such economic measures? One thing is certain: those in debt would likely benefit, especially in times of economic hardship.

Well, it depends on the true & subsequent value of the Argentine currency (peso?) vs the dollar when the forced exchange was implemented. If the value against the USD was 1.4, then those in debt probably gained, and they gained more if the peso devalued afterwards.

But it should not have happened in the first place. Things like that should have been done in civilized manner (maybe with good incentives) rather than like what is heard of in unfair societies where powers are easily abused/misused. I would say the leadership had too much power which normally can only be used against depositors who committed crime.     If the depositors had withdrawn their deposits to physical dollars, how would the leadership be able to find & forcefully exchange them to local currency? This is why people should be more careful leaving funds in banks of tyrannical, unfair, less developed societies as they can easily be misused/abused. Physical paper currencies are even "quite often" redesigned in such societies to render old designs (probably hidden longterm by people, like they hide gold in old times from criminals) useless

Many years down the road, it looks like the national currency has massively lost value against the dollar. Those who still had their funds in dollar became richers than those in the Argentine currency. While those that had their deposits forcefully converted to local currency would have been better off if they were left alone.

[South Park]

Imagine that people were looking helplessly as their savings were wiped out. Even though the idea behind such a policy seems good for people who are in debt, it smells like a desperate and short-sighted attempt to fix a complicated economic problem. People would never trust the banks again

The so-called reward for people who are in debt is just a band-aid over the real problem, which is bad money management and hard times financially. Such policies could probably make people not trust the financial system in the long run and could even cause capital to leave the country. Instead of taking such harsh actions, it's important to look at and suggest complete, well-thought-out plans

And even that supposed benefit probably does not even exist as then the banks can hike the interest rates you have to pay on your loan and make it impossible to pay anyway, and without a doubt the consequences will be huge for any governments and financial system putting this into practice, something that we know is completely true as Argentina has suffered from all kind of economic crises during the last decades and the citizens no longer trust the government in turn to do the right thing, and that is why they are using alternatives to their local currency so they can avoid being scammed by their own government again.

[Don Pedro Dinero]

No one in their right mind will want a corralon or corralito in their country, because even if it is of those who supposedly benefit from it, the indebted, as the OP says, the result is misery everywhere and an increasingly generalised impoverishment of the population. Such measures are only taken by populist and short-term politicians, leaving the country ruined for decades.

[Gozie51]

Corralón was the informal name for the economic measures taken in Argentina at the beginning of 2002 by President Eduardo Duhalde during a bank run in which deposits and debt in dollars were exchanged to local currency at 1.4 per dollar for deposits and 1.0 for debt (this was also called pesificación asimétrica). Previously, the withdrawal of dollars was limited to $250 per week. After the forced exchanged, people no longer had any dollars on the system and those who had savings in US dollars lost 65% of their deposited value.
https://en.m.wikipedia.org/wiki/Corral%C3%B3n

What are your thoughts on the quote above if your government implemented such economic measures? One thing is certain: those in debt would likely benefit, especially in times of economic hardship.

This is surely a corrective measure for countries that have been long dependent on US dollar to run their country. Countries who have stood with their local fiat currency have not had it tough like those who depend on dollar so it is evident that such exchange is a wake up call to all those countries making use of the dollar for exchange and transaction.

If an economic is jettisoning their local currency then they are only causing their fiat to be depreciating in value while the dependent currency keep appreciating because before you transact or exchange in import or export you then need to convert first and moreover, investors and politicians would prefer to hodl and hord the foreign currency and causing it to be scarce and that will push it exchange for local currency higher.