Uruguay's Exposure to Argentina's Economic Malaise

As Argentina's economic situation deteriorated over the past several years, Argentines flocked across the border to Uruguay to bank and invest. This has presented Uruguay with economic opportunities but also has exposed the small nation to considerable collateral risk and economic distortions that have compelled Buenos Aires and Montevideo to take corrective action. To prevent Argentines from pouring dollars into Uruguay and then pulling dollars out of the country en masse, potentially triggering a repeat of Uruguay's last crisis, the Uruguayan government has implemented capital controls and is considering adding more.