Signs that Argentina’s catastrophic hyperinflation is now entrenched? The Central Bank of Argentina has announced the issue of a new 2,000 peso note, in order to facilitate cash transactions. The new note is currently equivalent to just under 10 euros.
New banknote issued in Argentina to accompany inflation
Argentina is one of the territories most heavily affected by inflation. In 2022, it reached a record high of 95%, not seen since the early 1990s. The cost of living has doubled in the country, while the Argentine peso (ARS) continues to fall:
The Argentine peso has been falling steadily in recent years
At present, one Argentine peso is equivalent to 0.0049 euros. The depreciation of the currency and the increase in the cost of living make the use of cash more complex, hence the introduction of a new banknote.
2,000 peso notes
The 2,000 peso note will make it easier for people in Argentina to pay without having to use smaller denominations. Until now, the largest note was the 1,000 peso note. The measure does not change anything for Argentines’ savings, but the country’s central bank is nonetheless presenting this development in a positive light:
“As the process of digitisation of payment processes progresses, this larger denomination will improve the operations of cash dispensers, while at the same time optimising cash exchanges. “
To make a comparison, it’s as if Europe decided to create a €1,000 note, when the highest note is currently €500. This measure is just catching up with a basic trend, and it is possible that in the future we will see a 5,000 peso note issued by the Argentine central bank.
In Argentina, the dollar is very influential by virtue of its relative stability. The population uses it to anchor their savings, rather than having them in a currency that is rapidly losing its value. To counter this, the Argentine government recently announced plans for a common currency with Brazil. But this will of course take time, and runaway inflation is unlikely to stop until then.
