Thousands of savers in Argentina have been given a month to decide if they want to swap their bank deposits for government bonds.

The government hopes the plan will end the freeze on savings without leading to the collapse of the country's banking system.

Restrictions on savings were imposed in December last year to stop a run on bank accounts.

But the freeze led to public protests which helped to overthrow the then President Fernando de la Rua, and protests have continued this year with savers demanding access to their cash.

Options

Under the bond plan, savers have a month to decide if they want to accept peso or dollar bonds to replace their bank savings.

The government has offered to swap up to 60bn pesos ($16bn) of deposits for bonds that can be converted to cash in either three, five or 10 year's time.

Alternatively savers can opt for bank certificates which can be used to buy big ticket items such as properties and cars, or be used for paying off tax debts.

The government hopes the package will stimulate consumer spending, which has collapsed during the country's economic crisis.

"Today is D-day for the savings freeze," said Cabinet chief Alfredo Atanasof.

"We hope the transactions offered under the plan... will be enough to get rid of this corset imposed on the economy."

The International Monetary Fund (IMF) had wanted to swap savings for bonds to stop savers using their money to buy dollars and weaken the peso.

But many observers think savers are unlikely to accept the bonds.

Trouble spreading?

The financial crisis in Argentina is dragging down growth in Latin America, the United Nations (UN) said earlier this week.

The UN's regional body questioned the view that Argentina's problems would not spread.

"The story that it is possible to isolate the Argentine crisis has no basis," said Jose Antonio Ocampo, executive secretary of the United Nations Economic Commission for Latin America and the Caribbean.

"In reality, it is evident that it is generating contagion in the region."

Mr Ocampo said the region's economy was now forecast to come to a standstill or contract this year, whereas in February the growth of up to 0.5% had been predicted.

On Tuesday the IMF approved extra money for Brazil to protect it from the spillover effects from Argentina's economic crisis.

The latest review released a further $5.2bn of the IMF's loan, making about $10bn available to Brazil in total.

Also on Tuesday the IMF said its management had also recommended raising aid to Uruguay by $1.5bn.