Excerpts from Monday, April 22, 2002 front page Wall Street Journal

BUENOS AIRES -- Argentina will close its banks and foreign-exchange markets indefinitely starting Monday as the government prepares to take politically treacherous measures to rescue the banking system by further encroaching on Argentines' savings. "We run the risk of the system exploding," said President Eduardo Duhalde, Argentina's fifth leader since December.

Argentina, a country of 37 million people, was hailed by Washington as a model of free-market reform during the 1990s. Multinationals poured in money, and Wall Street lent Argentina's government and companies billions of dollars.

The announcement of the bank and foreign-exchange shutdown differed from earlier banking closures in that the government didn't set a date for reopening. Before announcing the systemwide closure, the central bank as of Friday suspended most transactions at Bank of Nova Scotia's Argentine unit, Scotiabank Quilmes SA, after the parent company refused to inject more cash into it. Friday afternoon at the headquarters of Scotiabank Quilmes, Argentina's 12th-largest bank, dozens of desperate depositors -- stepping around leaflets dropped by a bank employees' union saying, "Canada, Fork Over the Money" -- formed long lines in hopes of retrieving funds.

The stepped-up withdrawals followed thousands of individual legal rulings against draconian government restrictions on bank-account withdrawals put into place in December. A trickle of initial judicial rulings in depositors' favor turned into a flood this month. A group of depositors and their lawyers, brandishing the judicial rulings, holed up in state-owned Banco de la Nacion Argentina until around midnight Friday after bank employees failed to return their money.

The government's failure to meet agreed-upon fiscal targets led the IMF to suspend all loans to Argentina in December. "The IMF has no faith in the Duhalde regime -- zero," said Walter Molano, head of research at BCP Securities in Greenwich, Conn. "What the IMF is doing is saying, 'We'll just wait you out.'

The Scotiabank Quilmes closure fueled rumors that other mediumsize banks would be shuttered and provided a bleak preview of what the future might hold for many depositors. The central bank gave the Canadian-owned bank 30 days to present a reorganization plan. Scotiabank blamed its problems on the impact of the currency devaluation and also cited the central bank's refusal to provide emergency funds.