We have seen attempt after attempt to eliminate large-size banknotes and physical money altogether. This is often referred to as the “War on Cash,” and rightly so. Once all money is digitized, nothing more than little numbers flashing across computer screens, the banks will have virtually unlimited power to control every last cent of money in the hands of private citizens.
In a surprise move that is in direct opposition to nearly all of its peers (and against the wishes of many of the country’s most recent economic leaders), the central bank of Argentina—the Banco Central de la República Argentina—has decided to issue new large-denomination banknotes.
This year, 200-peso and 500-peso notes will be issued for the first time. Next year, the central bank will go a step further, introducing a 1,000-peso banknote.
Naturally, the idea of providing people with the physical cash they need is an anathema to most people in the central banking industry. Two former officials in Argentina have vehemently come out against the idea.
Former Economic Minister Axel Kicillof and former central bank president Alejandro Vanoli each issued statements reproving the use of large banknotes and cash in general. Last year, Kicillof said, “We have moved forward a lot in the expanded use of banks, electronic trading, and all means of payment that aren’t with notes, which is becoming obsolete. The largest note in the United States is $100, which is line with the one we have in Argentina.”
Bear in mind that this is hardly an apples-to-apples comparison: the 100-peso note has the equivalent buying power of roughly $6.50. Last I checked, a C-note got you a heck of a lot more than one meal at McDonald’s.
More recently, Vanoli was on the record saying, “Leading countries are moving to a system that uses more and more the electronic means of payment to make transactions easier. The future points to the disappearance of the notes so the solution isn’t to print more.”
By “easier,” he surely means more opaque and more readily at the whim of the central banks. Interesting paradox that Vanoli would decry printing more banknotes, but probably has no problem adding zeroes to the electronic money supply.
Voices of Reason
Despite the protests of former high-ranking government officials, the Argentine central bank is moving forward with its plans for new banknotes. Shown below, the 200-peso and 500-peso notes are vibrantly colored and bear designs of some of the distinctive flora and fauna of South America.
Among others who support the initiative as a much-needed service to the people of Argentina is Mauricio Macri, the pro-business politician who was just recently elected president. Macri completely agrees with the decision to issue the new notes in an attempt to arrest the country’s 28% inflation rate. Even the country’s new central bank president, Federico Sturzenegger has come around on the issue, admitting that “[t]he country had the same [banknotes] for too many years even though prices have multiplied more than 10 times.”
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