When the Argentine currency-board regime was abandoned, contagion effects also resulted from the government’s decision that the banks’ dollar liabilities had to be converted into peso at a much higher exchange rate than the assets. The banks could not anticipate such unfair treatment that implied huge losses.
According to market participants, this unusual measure has noticeably increased risk aversion vis-à-vis other countries in the region. Here, we have an example of what has been called political contagion: investors are afraid that other countries might feel encouraged to adopt similar disruptive measures.