In Argentina, the profession of electrician can prove to be very … profitable. There is a well-known story of a craftsman who was trying to repair obsolete electrical installations in an old house in Buenos Aires and suddenly, piercing the wall, he found whole rolls of dollars. Apparently one of the older tenants had stored them at the site, perhaps forgetting their existence. In no other country in the world – except the USA – are there as many dollars in circulation as in Argentina.
Economist and former central banker Nicolas Gandano estimates that about $ 200 billion in cash, or 10% of the total dollar circulated worldwide, is circulating or saved across the country. “The dollar is a tool for families who want to save, but at the same time protect their savings from inflation and secure the future value of their income,” says Mariana Louise, a sociologist and author of The Dollar, the history of an Argentine currency “. “The dollar serves as a barometer of economic and political developments in Argentina,” she said.
The trauma of the financial crisis
In fact, according to the available statistics, the average Argentine has put aside more dollars than the average … American: 4,400 against just 3,083! The passion for the US currency was further strengthened after the great trauma of the 2001 financial crisis. At the time, President Fernando de la Rua had effectively closed the banks, allowing depositors to withdraw up to 250 pesos a week. Since then, Argentines have lost confidence in their banking system and prefer to save at home: in vaults, but also on the floor, mattress or in their library. There are even relevant instructions on the Internet: the dollar is ideally kept at a temperature between 10 and 20 degrees and a humidity rate between 30 and 50%, while in order not to form mold, it is good to wrap the banknotes first in foil and then in nylon bags.
Of course, the unexpected is not missing. Sometimes savings are eaten by insects, other times by moisture. In Argentina there are companies that have specialized in the market of worn dollars from … second hand, with some supply of course. The biggest risk is the criminals, who know that another family without a special financial surface can hide thousands of dollars in their apartment. Violent robberies take place in homes from time to time, with the intruders torturing even the elderly, until they reveal the “hiding place” for their money.
Contempt for the national currency
The more they love the dollar in Argentina, the more they despise the national currency. With an inflation rate of around 50%, the “peso” loses its value so quickly that it does not need to stay in the wallet for long before it is spent. Only the dollar is offered for saving. In theory, the average Argentine is not allowed to earn more than $ 200 a week, but the “black market” dominates. “Cambio, cambio” people shout in the streets of Buenos Aires, looking for currency. Theoretically, giving and receiving this is forbidden, but the police probably tolerate it. After all, the “black exchange rate” is published every day in the newspapers. In recent days, the exchange rate of the so-called Dolar blue has reached record levels, as such a dollar yields 196 pesos, twice the official exchange rate.
With the chronic fiscal crisis plaguing the country, Argentines have become economics experts. A chat in the taxi will probably start with football, but in a few minutes it is certain that it will extend to the International Monetary Fund, inflation and the dollar exchange rate. In fact, dollar savings are not limited to the interior of the country. According to central bank estimates, Argentine deposits abroad amount to more than 400 billion euros, an amount that exceeds the country’s total public debt. The current head of the central bank, Miguel Angel Peske, points out that the country “needs a capital market that will turn savings into investment and business financing”. But in order to do that, the people’s confidence in the state of the economy must first be restored.
DW: Dennis Dittmann (DPA) – Giannis Papadimitriou
.
