Argentina's finance minister, Domingo Cavallo, yesterday made a direct appeal to the nation to redeposit the $10bn (£6.9bn) they have withdrawn from their bank accounts in the past six weeks.
His petition comes amid mounting fears that the country may default on its $120bn of bonds.
Argentinians have been withdrawing the cash in the anticipation that the Government might freeze bank accounts in a bid to stave off default. Banking deposits fell 9.5 per cent during July to $65.6bn. Last month, the Government used $4.4bn of reserves to support the financial system.
Mr Cavallo said: "If in the next week the almost $10bn that left the financial system, but is still in Argentina, returns and comes back day after day, you will see once again credit rates drop and that will reactivate the economy."
He warned if Argentina defaulted on the bonds, or devalued the peso, the country's savings institutions risked being destroyed altogether. Last week, HSBC Holdings warned that currency speculators appeared to be gearing up to force some of the world's weaker economies, such as Argentina, into a devaluation.
The country has been locked in talks with the International Monetary Fund over a rescue package thought to be worth between $6bn and $10bn. Yesterday, Argentinian bonds gained amid fresh hopes a deal was near.
Mr Cavallo was an economic adviser to Russia after it defaulted on bonds three years ago and was responsible for pegging the peso to the US dollar. The peg helped to restore the confidence of international investors in Argentina's financial institutions, but it has also become a burden as the dollar has strengthened and the country has slipped into recession.Reuse content