There are 11.859 billion banknotes in circulation in Argentina. A quick calculation gives an idea of what that means: every Argentine, and here we even count children, could have 258 bills of different denominations in their pocket. A similar calculation results in 68 bills per inhabitant in Chile and 35 in Brazil. That does not make Argentines richer, however. It happens that the highest denomination bill in Argentina is 10,000 pesos. It has only been on the streets for four months and is worth 10.2 dollars at the official exchange rate (9.2 euros) and 7.7 dollars on the black market. Finding them is a detective’s job. On the other hand, 1,000 pesos bills are abundant, available since 2017. There are 6.212 billion, more than half of the bills in circulation, of those orange bills bearing the face of the liberator José de San Martín. Its value is just 76 cents on the black market and 97 cents on the government-regulated exchange rate.
Argentina is not a cheap country in dollars, as you might think. To pay for a coffee in a bar, you will need, depending on the place, three thousand peso bills, about three dollars at the official exchange rate (there are more expensive ones). For a dinner for two people, in a place with moderate prices, you will have to find about 40 bills. Things get complicated, for example, if you have to go shopping at the supermarket: 150,000 pesos will be spent there without a doubt. A new mobile phone? You will have to spend between 300,000 and 1.5 million pesos. In addition to the price of a second-hand car, you will have to pay for a suitcase to carry the money: a low-end two-door car that is five years old costs 15 million pesos, that is, 15,000 thousand peso bills.
Most of these transactions, of course, can be made with a virtual wallet, a form of payment that has skyrocketed after the pandemic, reaching 65% of the population. But we must not be complacent: as the economic crisis worsens, more and more businesses are offering discounts for cash payments or not accepting cards at all to avoid bank and operator fees. For high-value transactions, such as a car or an apartment, it is best to buy dollars. Since there are very strict exchange restrictions, this will have to be done on the black market, at a rate of 1,300 pesos each, and in cash, of course. A suitcase full of bills will be inevitable.
The root of the problem is the inflation that is devastating the Argentine economy. Between 2014 and 2021, the annual average was 50%. In 2022, the situation began to get out of control and the CPI climbed to 94.8%. The year 2023 ended in December with 221% inflation and the first half of 2024 already registered an increase of 87%. Inflation is the visible face of the loss of value of the currency. To hide the fact that things were not going well, the different governments always delayed the printing of higher denomination currency. And so we came to the point where the most widely circulated banknote in Argentina today is not even enough to buy a candy, when just seven years ago it was worth 58 dollars.
One million pesos
The problem is not new. Argentines still remember that in the late 1970s the military printed million-peso bills. Removing zeros had already become a common practice to prevent the collapse of bank and corporate balance sheets. But also, and this is the point, because of the psychological impact, for example, of the 10,000-austral bill that Carlos Menem inherited from Raúl Alfonsín being converted in 1992, as if by magic, into a peso, and that peso now being enough to buy a dollar. Between 1969 and 1992, the Argentine currency lost 23 zeros, and with each pruning, a bit of its dignity.
The government of the far-right Javier Milei promised that 20,000 peso bills would be in circulation in October, equivalent to around 20 dollars at the official exchange rate and just over 15 dollars on the black market. This will be a relief, of course, although clearly insufficient.
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