Few know it, but our SE Mint (the factory that produces the banknotes we use every day) has a productive capacity, even higher than that of the neighbor Brazil: while ours produces some 800 million banknotes a year, the Brazilian manufactures about 2 billion unitswith the difference that Brazil has 212 million inhabitants, almost five times our population of 47 million people.
However, why does Brazil have the ability to “export” banknotes and not us? The answer lies in the abysmal difference between the denomination of our bills and yours, and the purchasing power of each bill. In Brazil, the highest bill is two hundred reais and in Argentina it is one thousand pesos. In Brazil, the highest bill of two hundred reais is equivalent to US$42. In Argentina, our thousand-peso bill is equivalent, after the brutal devaluation of the last two years, to barely US$5, a figure very far from the almost US $ 60 to which it was equivalent when it was issued for the first time in 2017, under the government of Mauricio Macri.
Namely, Brazil has a production surplus of banknotes, because their papers are logical with the rate at which their inflation advances. Meanwhile, in Argentina, we continue to use a $1,000 bill that is worth less every day, which means that the Mint has to be printing bills 24 hours a day, seven days a week, in order to meet the demand.
It goes without saying that, in addition to the opportunity cost that we lose by not doing what Brazil did and exporting banknotes, all this madness has an insane associated cost in dollars. Only in 2020 and 2021, the fact of not having made progress in printing a banknote higher denominationthe government of Alberto Fernández generated a surplus cost of US$ 186 million. Something that also happened during the government of Cristina Fernández de Kirchner, except that on that occasion, the cost of not printing a higher denomination bill between 2008 and 2015 cost all Argentines US$639 million.
With what they overspent in 2020 and 2021, it would have been possible to build 74 new schools or equip 4,400 educational establishments with the latest technology. If we do that calculation with what was overspent in the governments of Cristina Kirchner, the number leads to despair: 256 new schools . Inefficiency not only costs money, it also costs the future.
Regarding the components included in the banknotes, all of them, absolutely all are imported, except for its design and, obviously, the printing (which has sometimes been imported). From the paper and the ink of the ticket, through the offset ink (the one that changes, in the amount of the ticket, from green to black with the light) and the security thread, to the cardboard that separates the sheets of tickets, they are imported from countries such as Sweden, Switzerland and Brazil, with an associated cost in dollars that grows as more banknotes need to be printed. Single printing and design are “domestic manufacturing”.
It is in this context that President Alberto Fernández comes out to announce with all the pomp the launch of a new family of banknotes, with the excuse of “recovering the heroes” in our paper money. Unfortunately, in a new display of ignorance and ineffectiveness of this management, the announcement of bills of two, five, ten or twenty thousand pesos is nowhere to be seen, which would lead to taking advantage of this opportunity to do something more than demagogy and generate some efficiency in the state, and thus reduce the cost that we Argentines pay for issuing currency.
The worst thing about this whole thing is that its resolution requires nothing more than the use of common sense. Explained with simple numbers: currently, to carry ten thousand pesos in your wallet you need 10 bills of $1,000, 20 of $500, 50 of $200, 100 of $100… and $10,000 in today’s hyperinflationary Argentina is not much money, although yes it costs a lot to win it.
To carry the same money, if we had a $2,000 bill we would need 5 bills, only two if we had a $5,000 bill, and only one if we had a $10,000 bill (which would be closer to the $1,000 in 2017, now with something like $50). It is so evident that it is surprising that the government does not take it into account. N
At a time when the ceconomic crisis it deepens every day and no one knows where we will end up, with more than 50% poor, inflation going straight to 100% and a phenomenal shortage of foreign currency (which is only moderated because we are in the harvest months and liquidation of the countryside), the government makes its demagoguery a priority. But the story is expensive, very expensive. And we all pay the bill.
August Ardiles. Former director of the SE Casa de Moneda.
by Augusto Ardiles
