Argentina is rushing to import banknotes as its national mint struggles to keep pace with soaring central bank issuance and inflation of more than 45%. The mint is importing printed bills for the first time in five years and is also boosting its purchases of the paper used to make banknotes, according to three people with direct knowledge of the matter.
The pace of monetary issuance has accelerated in recent months as the central bank creates pesos that the government then uses to pay for its coronavirus stimulus plans. The bank has transferred 1.3 trillion pesos (US$ 19 billion) to the administration so far this year.
The nominal value of bills and coins in circulation jumped 80% this month from a year earlier. The pace at which consumer goods prices are rising increases households’ need for cash.
The mint is currently operating at 100% capacity for the first time since 2015, and has stepped up purchases of the raw material for its banknotes from abroad. Sweden’s Crane Currency is providing paper to print 1,000-peso bills while Russia’s state-owned Goznak is providing the paper for 200-peso bills.
There’s also an ongoing international tender to import 250 million bills worth 500 pesos each, according to the official gazette.
A spokesperson for the mint said that if this tender is successful, there won’t be any shortage of bills. A central bank spokesman said the institution isn’t seeing any problems caused by insufficient bank notes.
The mint’s ability to meet the country’s demand for cash was undermined at the start of the year, when the government scrapped a plan to begin printing 5,000 peso bills for the first time.
The bill’s design was complete in March but it was then shelved, according to the mint’s press office. If a 5,000-peso bill were in circulation, the mint could easily supply the country with enough banknotes, the people added. However it would also give an idea of the loss of value of Argentine currency and the rate of inflation.