Part of the 'inheritance' received by the future Javier Milei government as from this weekend is the record money-printing. During the Alberto Fernández presidency, the number of banknotes in circulation in Argentina rose 80 percent by comparison with the total registered at the end of his predecessor Mauricio Macri’s term.
When Frente de Todos came to power in December, 2019, there were 5.2425 billion banknotes in circulation with 1,000 pesos as the highest denomination. That has since risen to 2,000 pesos with an unprecedented 9.4393 billion banknotes in the streets, Bloomberg Línea reports.
Divided by the 46,044,703 people populating Argentina according to the 2022 census, that makes for an average of 2,050 banknotes per inhabitant.
When Alberto Fernández reached the Casa Rosada, 100-peso banknotes represented 46.8 percent of the total in circulation with those worth 1,000 pesos barely 5.9 percent. With Javier Milei on the brink of inauguration, the 100-peso banknotes barely symbolise 15.9 percent and those of 1,000 pesos 51.4 percent of the banknotes in circulation in Argentina or over half.
The latter is no longer the highest denomination, overtaken since last May with the 2,000-peso banknote, of which there are 176.7 million in circulation or barely 1.9 percent of the total, according to the Central Bank. Printing currency up to the values of 5,000 and even 10,000 pesos had been within the plans of the outgoing government, even reaching an advanced stage but later ruled out.
The 1,000-peso and 2,000-peso banknotes are printed on three different continents. Argentina’s Mint is joined by those of Brazil and Spain (Casa da Moeda and Fábrica Nacional de Moneda y Timbre respectively) and by the China Banknote Printing and Minting Corporation. In recent months the currency has been freighted via air and sea from those three countries, as well as Germany, France and Malta.
During the electoral campaign, president-elect Javier Milei attributed the persistently high rise in prices to precisely money-printing, affirming that "it is partly transferred to inflation."
"Inflation will continue being high as the result of this government’s disasters. We are creating all the mechanisms to stop printing money so that within a period of 18 to 24 months we can halt inflation. Such is the empirical evidence of the Argentine case. Convertibility, which worked according to similar rules, took 20 months," he argued in dialogue with Radio La Red.
Another important point, when analysing the effects of this major presence of banknotes is the value each has in day-to-day economics, which is definitely what most bothers Argentines – their purchasing-power.
In 2015, at the end of Cristina Fernández de Kirchner’s second term, the highest denomination was 100 pesos, the equivalent of US$10.17 at the parallel exchange rate of that time.
When Mauricio Macri left the presidency in 2019, the highest denomination had become 1,000 pesos representing some US$14.28. Today’s highest denomination of 2,000 pesos equals just over US$2.
In the last eight years the top Argentine banknote has thus plunged 80 percent when measured against United States currency.