Argentina has been suffering from extremely high inflation for months. In response, the central bank now wants to issue 20,000 notes of the local currency, the peso.
Argentina’s central bank wants to respond to escalating inflation by issuing new banknotes. 10,000 and 20,000 peso notes will be put into circulation this year, the monetary authorities announced on Thursday evening. The largest banknote so far is the 2,000 peso note, which was only introduced last year.
The reason for the central bank’s measure is the massive currency devaluation in the country. Consumer prices rose by more than 211 percent in December compared to the same month last year. In particular, the costs of health, transport and food rose sharply, giving Argentina its highest inflation rate in 2023 since the hyperinflation of 1990. From November to December alone, prices rose by more than 25 percent.
Radical restructuring of the country
The new President Javier Milei, who has been in office for around a month, wants to reduce inflation with tough austerity measures. The right-wing populist and economist Milei, who describes himself as an anarcho-capitalist, announced a radical restructuring of his country during the election campaign.
This should include, among other things, drastic spending cuts and the abolition of the national currency, the peso, in favor of a peg to the dollar. However, he himself admits that the situation will get worse before it improves.
Around 40 percent live in poverty
Many Argentines are already having to tighten their belts because of the sharp rise in prices. Two fifths already live in poverty. “Nothing is cheap,” complained 65-year-old pensioner Graciela Bravo, who is now carefully counting how many potatoes end up in her shopping basket: “We used to buy kilos, now I buy three or four potatoes so that they don’t spoil.”
Lawyer Alejandro Grossi also has to save money. “I buy fewer things than I would like, so you adapt,” said the 49-year-old. “It’s like we’re used to it. It’s something so natural here: inflation and constantly changing prices.”
The inflation rate in Argentina is one of the highest in the world. South America’s second largest economy suffers from a bloated state apparatus, low industrial productivity and a large shadow economy that deprives the state of a lot of tax revenue.