Argentina Plans Larger-Denomination Bill as Inflation Nears 100% (From Bloomberg)
~ Friday, February 3, 2023 Blog Post ~
By Patrick Gillespie and Scott Squires, Bloomberg News
- Central bank announces it will print 2,000 peso note
- Decision comes as cash becomes burdensome in Argentina
Argentina’s central bank will print bank notes of larger denomination after months of complaints by residents and tourists who, faced with inflation of near 100% a year, have to carry increasingly bigger piles of cash to pay for everyday purchases.
The monetary authority announced Thursday it authorized the national mint to design a 2,000-peso bank note, double the value of the country’s largest denomination bill today, but still worth about $6 only, according to Argentina’s commonly used informal exchange rates.
Central bank officials were reluctant to print higher-value bank notes for months, insisting that investment in digital payment platforms was a better use of resources. The decision to launch a 2,000-peso bill hints at that hesitancy: Local media had reported that denominations of as much as 10,000 pesos were being considered.
Scenes reminiscent of Venezuela or other high-inflation countries emerged in Argentina in recent months with tourists paying restaurant bills with stacks of cash and banks running out room to store bank notes destined for ATMs. A gap between Argentina’s official and parallel exchange rates encourages cash use, especially among tourists who arrive with dollar bills.
Digital payments have increased too, the central bank said in a statement. The number of bank transfers rose 99% in December from a year ago, while payments made with QR codes were up 41% over the same period.
©2023 Bloomberg L.P.
Argentina’s peso is depreciating so quickly as inflation approaches 100% that banks are running out of space to store bank notes. Lucia He and Carolina Millan explain. Source: Bloomberg
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