Cashing out

In the past few years coins have been in constant shortage, making life in Buenos Aires an ongoing struggle to secure change from shopkeepers or scrape together enough money for bus fares. Over the Christmas holidays, cash machines throughout the country ran out of banknotes, leading to long queues. Why is Argentina unable to manage its cash flow?

Inflation denial: Although government statistics claim inflation is 10.9 per cent, economists estimate the real figure at around 25 per cent. Changing the printing and minting order – with, say, fewer low-value coins and more higher-denomination notes – could look like a concession that inflation is a bigger problem than acknowledged previously and could be used for political gain by the opposition.

Flashing the cash: Argentineans remain distrustful of the banking system after the 2001 economic crash,when a lot of people saw their life savings disappear. Many in the country avoid card payments and bank transfers, sticking to cash, which puts a large burden on a struggling system.There’s also widespread tax evasion – a vast black economy – with Argentineans preferring cash to avoid leaving financial traces.This makes it increasingly difficult for monetary authorities to judge how many coins and notes to circulate.

Mean machines: Although wider questions need to be asked about the Central Bank’s planning, Argentina’s minting authority, the Casa de la Moneda, is currently forced to rely on outdated machines from the 1970s that lack the capacity to print enough money to feed the national cash thirst. A share of peso production has even been farmed out to neighbouring Brazil.