ABSTRACT: The Argentine crisis of 2002 has been variously blamed on fiscal imbalances, real overvaluation, and self-fulfilling investor pessimism triggering a capital flow reversal. This chapter provides an encompassing assessment of the role of these and other ingredients in the gestation of the crisis. Conceptually, the macroeconomic collapse must have resulted from much greater shocks than those hitting other countries, or from a weaker and more vulnerable policy framework, or both. In this framework, the chapter shows that in the final years of Convertibility, Argentina was not hit harder than other emerging markets by global terms-of-trade and financial disturbances. Hence the crisis primarily reflects the high vulnerability to shocks built into Argentina's policy framework. Three key sources of vulnerability are examined: the hard peg adopted against Optimal Currency Area considerations in a context of wage and price inflexibility; the fragile fiscal position resulting from an expansionary stance during the boom; and the pervasive mismatches in the portfolios of banks' borrowers. These vulnerabilities were mutually reinforcing, and severely constrained the room for maneuver available to the authorities – who failed to use it effectively while there was still time to avert the collapse.