Argentina's coin crisis
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Argentina's coin crisis
1–10 of 36 posts
Re: Argentina's coin crisis
#2I don't understand why the government can't mint more coins and exchange them with the banks for notes.
Re: Argentina's coin crisis
#3This makes no sense to me. Why would people value a coin above face value, no matter how few there are? Isn't there significant arbitrage opportunity there then?
Re: Argentina's coin crisis
#4This makes no sense to me. Why would people value a coin above face value, no matter how few there are? Isn't there significant arbitrage opportunity there then?
Because you need to take a bus to go to work. Buses have machines that only accept coins. If you don't have coins, you can't go to work. This is mostly an issue with one-peso coins, as the bus costs 90c.
It's extremely stupid, and also self-fulfilling. Small businesses are afraid of running out of coins so they hoard them. It's really not that big of a deal if you don't take the bus (I either walk or drive depending on the distance). A couple of times in the past year I did have to stand in line at the bank to get change for laundry.
Re: Argentina's coin crisis
#5I don't understand why the government can't mint more coins and exchange them with the banks for notes.
They did, in record numbers. It didn't help; the coins were simply hoarded.
Re: Argentina's coin crisis
#6I don't understand why the government can't mint more coins and exchange them with the banks for notes.
It costs a lot of money to make coins. With inflation appearing to always be just around the corner, the government if afraid of investing tons of money to mint coins that could some become worth significantly less than the metal they're made of.
Re: Argentina's coin crisis
#7This makes no sense to me. Why would people value a coin above face value, no matter how few there are? Isn't there significant arbitrage opportunity there then?
Yes, there is a black market for coins here in Buenos Aires. That is part of the problem.
Re: Argentina's coin crisis
#8This makes no sense to me. Why would people value a coin above face value, no matter how few there are? Isn't there significant arbitrage opportunity there then?
How significant would said arbitrage be, though? In terms of percentages of individual purchases, sure, but if there's a way to scale it up it isn't obvious to me.
In Mexico, the same problem exists, although by the sound of things it isn't nearly as acute as in Argentina. In general, established and professionally run businesses have change; small and informal ones do not. (I think this stems from security concerns: large and well-run businesses have private security and insurance; small ones do not.)
After a while you learn the strategy of making certain purchases at certain places and where those places are. (This can sometimes leave you in a minor bind when you're outside your regular stomping grounds.) You learn the optimal amounts of money to withdraw from different banks' ATMs.
So, having small change buys you not just goods and services — all money does that. It also buys you a bit of time and saves you from aggravation. It really sucks to wait 5 minutes to get change back from a small purchase, as the cashier leaves the store to ask all the neighboring stores if they have change.
Finally, the same phenomenon exists in stable and well-developed countries too, albeit writ small: just ask someone who lives in a small apartment without a washing machine whether he tends to hoard quarters.
Re: Argentina's coin crisis
#9This makes no sense to me. Why would people value a coin above face value, no matter how few there are? Isn't there significant arbitrage opportunity there then?
How significant would said arbitrage be, though? In terms of percentages of individual purchases, sure, but if there's a way to scale it up it isn't obvious to me. In Mexico, the same problem exists, although by the sound of things it isn't nearly as acute as in Argentina. In general, established and professionally run businesses have change; small and informal ones do not. (I think this stems from security concerns:…
In Italy, it's pretty common, even at a busy line in a busy supermarket downtown in a big, busy city, for the cashier to stop and ask if you have exact change, or something close. And then wait while you fish around in your wallet and count it out. Not nearly so bad as what's described in the article, but annoying just the same.
Re: Argentina's coin crisis
#10This feels like something out of the onion.