Bizarre. Annoying. Frustrating. All are words that can be used to describe the current moneda (coin) crisis that is ensnaring Buenos Aires. Go to the corner kiosko and you’re likely to see a small cardboard sign stating, “no hay monedas.” Attempting to buy a $3.50 Coca-Cola with a 5 pesos bill? Suerte! The kioskero will roll his eyes, sigh and grimace. If he has the monedas, this cashier will begrudgingly give up the $1.50 in coins. But if he is short, he will either offer candy in place of the coins, round the price of the sale down to the nearest peso, or could even refuse the sale.
The stresses of this coin shortage are not limited to businesses running the risk of not having enough change, however. Since most colectivos (buses) in Buenos Aires accept coins for payment, nearly everyone living in this city has been affected. For example, just last weekend I needed to visit the province of Buenos Aires via colectivo, a voyage that was going to cost me approximately 6 pesos in coins round-trip. As expected, I was short on change. So I dipped into a couple different subway stations and bought several one-way subway tickets at $1.10 with $2.00 notes, just to get the $0.90 in change. All this hassle, just for a few coins to take the bus!
Those who do no currently live in Buenos Aires probably think that I’m speaking in hyperboles. No sir! The coin shortage has caused real complications for daily bus commuters, supermarkets, and kioskos alike. Because of an Argentine law that favors customers in such moneda-less transactions, local businesses frequently lose small portions of the revenue as they are required to round prices down. Occasionally, even the subway system is forced to give passengers free fares because they lack sufficient coinage. But why is Argentina experiencing this shortage? And who’s trying to make it better?
Who’s to blame?
Ask a dozen Porteños why they think there is a shortage of coins, and you’ll get several different explanations. Each resembling some sort of conspiracy theory, these conjectures place blame on at least one of the following suspects: the Argentine Central Bank, bus companies, cash transport companies, toll road companies, the Federal Government, and private citizens.
But why would these groups want to generate an artificial coin shortage? Generally, when there is a shortage of any item in the formal market, a scurrilous black market emerges where that item can be sold at a generous profit. Coins on the black market are known to be sold at an 8 to 15% markup. A full probing discussion of each theory is beyond the scope of this article. So we’ll quickly touch on just a few of the explanations.
Let’s begin with the Argentine Central Bank, the sole supplier of currency to the market. Critics suspect that the Central Bank has been negligent in its production of new coins. They argue that if the government simply printed more coins, then the market would be flooded with monedas, thus ending the shortage. But the Central Bank printed 524 million coins in 2008, a notable increase from 2006 when the bank minted only 160 million new coins in a time without crisis. Therefore, the blame placed on the Central Bank seems unfounded, as this institution is at least trying to alleviate the current situation at hand.
Perhaps the more likely culprits are the companies that collect large amounts of coins. For instance, the bus companies collect millions of coins everyday, but don’t return an equal amount of coins in change. Likewise, the companies that transport large amounts of cash have the opportunity to hoard coins. In October 2008, a private cash transport company that was connected to two bus companies was found hoarding 13 million coins. Herein lies the rub, the colectivos have been coin operated for years and there has not been a shortage in the past. This would seem to suggest that either the bus companies have recently conceived of this lucrative side business, or that there are additional factors at play.
Conversely, while private citizens may not have been the initial cause of the shortage, they could very well be exasperating the problem. If you are like me, you keep a stash of coins in your apartment because of the shortage. Just the perception of coin scarcity will lead to hoarding which, in turn, leads to more scarcity.
What’s the solution?
Don’t despair. There are a few solutions to the shortage, but their level of success has yet to be measured. The most effective remedy may be to make it possible for all colectivos to accept electronic cards for fare payment, similar to the subway system’s Monedero card. The government has implemented the use of electronic cards on a many bus lines and has plans to further expand it. Another remedy proposed by the Wall Street Journal calls for the subways and buses to print their own tokens, which can be purchased with cash at designated locations.
The association of Argentine Chinese Supermarkets (Casrech) has decided to issue tickets in place of coins when they don’t have adequate change. The tickets can later be redeemed for 110% of face value. But this ticket system may simply be an indication of the greater problem at hand, as this may be a strategy to avoid having to buy coins on the black market at a rate greater than that 110%.
Additionally, the government has further tried to alleviate the situation by enacting a law that obligates banks to change up to 20 pesos for coins per day for those holding an Argentine bank account. Unfortunately, most banks simply ignore the law, even though a few have been fined for it.
What can you do?
The most common strategy for obtaining a healthy stash of monedas is by getting change for $1.10 subway tickets. Regular subway riders will buy individual tickets each time they commute, and walk away with that healthy 90 cents in change.
If you need large amounts of change, and you don’t consider time to be money, the most reliable place to obtain your stash is at either Retiro or Once train station. Here you can exchange bills for coins, but ojo! (watch out!), you could wait in line for hours to do so.
Although the coin shortage may cause you the occasional inconvenience, be thankful for the fact that you do not own a kiosko, taxi, or supermarket. This unfortunate group is seeing their actual income affected by the shortage. Hopefully, we will soon see the day when coins are a simple annoyance, and not something that can elicit a death stare from a cashier. Until then, I eagerly await the day when Bon Bons are no longer used as legal tender.