Argentina has said it would pay all its creditors in Buenos Aires, seeking to circumvent a US court order barring it from repaying the debt it restructured after its 2001 default.
The move aims to work around a US judge's ruling in favour of two "holdout" creditors who refused a bond write-down, which blocked Argentina from servicing its restructured debt and forced it into a new default.
But it is unlikely to resolve the country's dispute with the two hedge funds that took it to court for $1.3bn, NML Capital and Aurelius Capital Management, which Argentina calls "vulture funds."
The announcement comes after President Cristina Kirchner said yesterday that Argentina was replacing Bank of New York Mellon, the bank responsible for transferring its debt payments to creditors, with the Argentine state-run Banco Nacion Trust.
Bank of New York Mellon has frozen the $539-million interest payment that Argentina was due to make to so-called "exchange" bondholders on 30 June, in line with Mr Griesa's ruling.
Argentine Economy Minister Axel Kicillof said creditors would not be required to accept the switch.
"Every bondholder can seek and request another seat of payment," he told a press conference.
He said holdout creditors would be welcome to sign up for the plan like all other bondholders, if they accepted the same write-down - which he acknowledged billionaire speculator Paul Singer, the founder of NML's parent company, was unlikely to do.
The holdouts "can come and exchange those bonds and if they do it they will achieve profits of 300%. Is that too little for Mr Singer? Yes, because he's a vulture, but we're going to pay him," Mr Kicillof said.
NML stands to make a profit of 1,600% if it manages to make Argentina pay it the full $800m Mr Griesa's ruling awarded it.
The Argentine government has sent a bill enacting the bank change to Congress, where it has a majority.
Mr Kirchner would need to sign the bill into law in time for the switch to be made by 30 September, when Argentina is due to pay exchange bondholders another $200m.