Argentina’s central bank has begun the process of distributing a new higher denomination $2,000 note, which went into circulation this Monday, but no longer has the same value as when it was announced.
Argentina’s central bank New higher denomination banknote, $2,000 , began distribution on Monday this week. Still not High inflation has already left behind new banknotes that have not yet fully seen the light of day.
In this regard, market analysts estimate that: The $2,000 bill has already lost nearly 20% of its purchasing power from its release date to April 23rd.
among them twitter accountSalvador Vitelli, head of research at Romano Group, points out: Tickets should have been $2,500 each. That’s how quickly our currency loses value. ”
In the same sentence, economist Natalia Mochil said: To maintain purchasing power, the highest denomination note must be worth $2,500 February of this year,” according to Vitelli.
“A bill of $2,000 after February accumulates a purchasing power loss of 26% (CER). Research team member Nicholas Olive said in an interview with the media.
How much should the highest denomination banknote be?
“To maintain the purchasing power of the highest denomination banknote in circulation at the end of 2017, $1,000, Today it should be worth $11,364. If we stick only to technical issues, the evolution of the dollar should follow suit. If you look at today’s official dollar, it should be $3,000, and if you look at the blue, it should be $5,000,” Mochil explained.
“The highest denomination banknote depends on which moment in history it stops at, but based on purchasing power in the 90s, a coffee was worth 1 peso, and that was the smallest banknote. Coffee today is close to $500. I did,” commented Olive.
$50,000 bill: highest denomination
“I would say the minimum bill is $500. Also, when it comes to currency ranges, banknotes typically have a 100x spread from low to high. Thus, logic and reason tell us that top denomination he should be 50,000 ARS,” warned Olive.
And he exemplified: For USD, it will be 1 to 100 USD.
“Besides the fact that the dollar today does not have the same purchasing power as the dollar in the 90s, inflation in the United States also had a very serious effect, so for the dollar, since 2001, the We had purchasing power: 70% of inflation, $100 in 2001, $170 today,” commented Olive.
“If you want to take the top denomination of US$100 sent from the United States in 2001, it is now 78,400 Ars RS.” concluded the financial analyst.
the root of the problem
rapid and sustained inflation For several years there was a debate about the denomination of banknotes. the permanence of the $1,000 bill as the highest denomination of pesolines, It created difficulties and additional costs for banks and businesses that handle large amounts of cash.
For this, Argentina needs the issuance of high denomination banknotes to facilitate economic transactions and optimize its operations. And because you need more and more paper to access the same basket of goods and services.
The underlying problem is the impairment of the peso’s real value, and since the peso was created and circulated in December 2017, The $1,000 bill has already lost 94.5% of its dollar value according to an analysis conducted by Focus Markets by Damian Di Pace, claims that: “In December 2022, the purchasing power of the $1,000 bill is 20 times lower than it was in December 2017.”
The need to issue higher denomination notes became apparent, and the approval of the new $2,000 note reaffirms that despite the Argentine government’s ignorance of its most serious problems. inflation.