On February 2 of this year, the Central Bank officially communicated that the machine was starting to go out on the streets in June or next July at the latest. the $2,000 bill. A much needed announcement though “short” since for the unstoppable rise in prices perhaps higher denomination notes would be needed.
But it is known that the imprint of the Kirchner governments is, precisely on the issuing of tickets, go against common sense.
Central Bank data says they are in circulation: 3,086 million $1,000 bills; 1,322 million $500 bills; 2,479 million $200 bills; 1,966 million $100 bills; 200 million $50 bills; 406 million $20 bills and 487 million $10 bills.
These numbers indicate it almost 40% of banknotes in circulation are of the maximum denomination. Those of $1,000 –equivalent to $2.31 blue according to the closing this Thursday. The others, almost annoying. The proof is in people’s annoyance when they go to the ATM and receive bills other than $1,000.
But let’s go back to the $2,000 bill. An impressive fact is that when it comes out on the field its purchasing power will be greatly eroded. From the day of the announcement to today April 21, the loss was considerable. It would be necessary to post an errata: “Where it says $2000 it should say $1639”. because this is the actual ticket value today. All because of inflation, which it was 6.6% in February; 7.7% in March and 4.9% so far in April, assuming that this month ends with 7% inflation.
Another way of looking at things. One could say that to make a purchase that in February was paid for with a hypothetical $2,000 bill, $2,408 will be needed today. That is, one $2,000 bill plus two $200 bills, plus another $10 bill, in exchange for a $2 bill. All to offset 20.4% inflation accumulated since the day a new $2,000 note was announced that will honor Dr. Cecilia Grierson, Dr. Ramón Carrillo and the Malbrán Institute.
Beyond these number games (or less games) the truth is this there is an overabundance of very low bills on the street. And this goes beyond the phenomenon of low demand for money, i.e. the willingness of the public to keep the pesos in their possession. Exactly the opposite happens: people want to get rid of their pesos as soon as possible. It is an attitude inherent in the inflationary phenomenon that we Argentines are suffering.
The truth is that banknotes advance, wear out and must be destroyed. But the process of destroying banknotes proceeds at a slow speed. This has led to banks accumulating mountains of banknotes suitable for destruction in their vaults.
This means that the banks they pile up stacks and stacks of $100 bills and don’t know what to do with them, because for some reason the Central Bank is not destroying the required amount of banknotes. Nor does it accept to receive them from the banks. A surprising situation arises. Banks must allocate resources to build bins specially designed to hold $100 billsalthough it could well be said that they accumulate garbage, since those bills will no longer come out on the street.
The other problem is that only a part of these bills are considered by the BCRA due to “encajes”. Another part is calculated in the liquidity account. Thus, astonishing as it may seem, this “junk” waiting to be destroyed contributes to the central bank’s monetary policy.
The rest is money that depreciates without being able to give it any use. Because from now on he doesn’t even pay interest.
At a front-line bank, they have indicated that they are building 200-square-foot vaults, at a rate of one a quarter, to be filled with $100 bills. All with security cameras and consistent regulations issued by the Central Bank.
Source: Clarin
