Argentina introduces 10,000-peso banknote worth only $10
What's the story
The Central Bank of Argentina issued a new 10,000-peso banknote on Tuesday, which is five times the size of the previous highest-valued 2,000-peso bill. The note, depicting independence leaders Manuel Belgrano and Maria Remedios del Valle, is, however, only worth approximately $10. The launch came amid an economic crisis in Argentina, which has resulted in annual inflation approaching 290% and approximately half the population living in destitution.
Note's objective
Purpose and impact of the new 10,000 peso note
The value of the 10,000-peso note is $11 at the official rate, whereas it is only worth $9 when converted to parallel rates that are readily accessible in order to circumvent stringent capital controls. The issuance of a 20,000-peso note is also anticipated by the central bank later this year. The bank said that the 10,000 peso note, along with the 20,000 peso bill, would "facilitate transactions between users," simplify financial system logistics, and cut costs.
Crisis management
Argentina's economic crisis and governmental response
Argentina's newly elected libertarian President Javier Milei is striving to tackle the economic crisis inherited from years of governmental failures across the political spectrum. His austerity measures and cost-cutting strategies have successfully reduced monthly price increases faster than anticipated, although annual inflation remains alarmingly high. These actions have allowed the central bank to significantly cut interest rates in recent months, despite a daunting economic future predicted by the International Monetary Fund (IMF).
Economic outlook
IMF's economic forecast and Argentina's debt
The IMF predicts a significant drop in economic growth of -2.8%, along with hyperinflation surpassing 249.8%. Notably, the issuance of high-denomination banknotes is not new in Argentina, which had a bill with a face value of one million pesos in the 1980s. The current top 2,000 peso bill is worth slightly more than $2 at the official exchange rate.