Coatsworth explains that Argentina experienced financial distress repeatedly because the Argentine monetary regime operated without a central bank. "Until that time, a potential cause of a suboptimal financial structure came from the existence of a different kind of monetary authority, the Caja De Conversion" (Coatsworth 153). Essentially, the Caja 's job was to ensure the external value of domestic currency. The problem here was that the Caja could not "...act as a lender of last resort for the financial system without threatening its macroeconomic responsibility of defending the external value of the domestic currency" (Coatsworth 153). The result was that Argentina 's banking industry was in ruins and bank stock prices fell by 38% in one year (Coatsworth 155). Eckstein states that after the revolution, the new Bolivian government enacted policies that offered low interest long-term credits. The Bolivian Agricultural Bank 's purpose was to aid the development of small farmers and help produce substitutes for imported foods. However, the unintended result was that the Bolivian government had to "seek foreign assistance and accept creditor loans biases" because they were not able to produce enough revenue (Coatsworth 163). In both cases, each countries ' financial policies created problems that prevented them from …show more content…
Eckstein exposes how low state revenues that force the Bolivian government to accept other countries ' investment. "When sufficient revenue cannot be generated internally to address economic and political needs, even ideologically nationalist regimes will seek foreign assistance and accept creditor loan biases" (Coatsworth 132) The negative result is that foreign countries have say in the distribution of Bolivia 's resources which leads to inefficient agricultural development. Essentially, "...foreign capital had come to play such an important role that it contributed to the breakdown of the populist coalition" (Coatsworth