Uruguay financial crisis remembered.

The summer of 2007 is the five year anniversary of the resolution of the 2002 financial crisis in Uruguay. As the crisis developed, the Financial Times (London) on July 29, 2002 said that Uruguay "will need a miracle similar to its World Cup victory in 1950 to survive." According to a presentation given on May 29, 2007 at a conference in Montevideo by a former United States (US) Treasury official who was a key player in helping to resolve the crisis, the Times also said that the odds against a solution were 100 to 1.

The Treasury official recounted to the conference that over the weekend of July 27-28, 2002, Uruguayan officials were desperately working with the US Treasury in Washington to avoid default. One Uruguayan at the Washington meeting said that default would mean "going back to the stone age" for his country.

The most immediate problem at the time was a run on Uruguay's banks with consumers worried that the banks would run out of dollars. In a risky maneuver, the US Treasury analyzed Uruguayan deposits and found that "with a lot of arm twisting" with other international players, if dollar checking and savings deposits were backed 100 percent, this would convince consumers to keep their money in the banks. The solution worked, and as the International Monetary Fund (IMF) said on December 7, 2006, "Uruguay's recovery from the crisis of 2002 has exceeded all expectations."