Where are Argentina's coins?

BUENOS AIRES — Think you’ve got cash problems? Just be glad you’re not in Argentina.

No one knows the inconveniences of the peso better than Buenos Aires’s convenience store owners. Walter Teich and his wife opened one right in the center of town three years ago. He’s seen a lot of coins come and go, but never so few as right now.

“There’s no coins, they don’t exist,” said Teich, standing next to a hand-written sign taped to the cash register telling his customers as much. “And it’s getting worse all the time.”

The coin scarcity has created a strange predicament: Merchants regularly refuse to sell their goods or services if it means they’ll have to give coins back as change. For small transactions, they’d rather lose the revenue than spare the change.

Teich, for example, won’t make a photocopy — and earn his 20 cents — for anyone who doesn’t offer exact change. He simply doesn’t have the coins, even after he and his wife make separate trips to the bank to buy the daily 20-peso coin ration that the government guarantees.

And even the guarantees don’t always work. Many of the banks are as loath to let go of their coins as the small businesses are. A spokesman for the Central Bank of Argentina says that 14 of the largest banks in the country have already been fined 10,000 pesos — about $2,700 each — for failing to change bills into coins. Advertisements can be seen all over the city promoting hotlines for complaints against banks.

The scarcity has prompted everyone to overvalue coins.

Black markets have reportedly cropped up for the resale of coins at more than 7 percent above their face value. And starting in June in Buenos Aires, more than half of the 3,200 members of the Chamber of Chinese Supermarkets (ubiquitous small groceries run by immigrants from China, not markets of Chinese food) will start issuing their own special bonds as change for purchases, worth 10 percent more than the coins they would otherwise give customers. The move is expected to cost the groceries less than the 450 to 600 pesos ($120 to $160) they spend weekly buying coins on the black market, according to chamber estimates.

The cause of the coin scarcity isn’t clear. The Central Bank says it’s supplying enough: a record 524 million new coins in 2008, up 13 percent from 2007. This year will likely bring a new record, and there are supposedly 5 billion Argentine coins currently in circulation — about 125 per person.

Many blame coin hoarders and black-marketeers, several of whom have been caught. But they seem to be effects, rather than causes, of the shortage. Another scapegoat is the city buses, which until now have only accepted coins. The role of buses may soon be seen, once a promised electronic card system takes effect. But history makes it hard to blame the buses too much: The city bus was introduced in Argentina almost a century ago, while the coin problem is new.

The shortage might have been precipitated by the rise in commodity prices in the last few years, said Dardo Ferrer, chief economist at the Market Foundation. There have been reports of people inside Argentina and across its borders melting coins for their metal, which became worth more than coins's face value when the price of raw materials rose.

But even high-rollers who manage to avoid small change face another perennial problem: counterfeit bills. Argentina’s economy is, in Ferrer’s words, a “propitious climate” for banknote forgery. Compared to most of its neighbors, Argentina has enough money going around to support this moderately high-tech crime, but not enough to combat it with all the security measures that richer countries have.

The omnipresence of counterfeit bills here is almost as apparent as the absence of coins. The same small business owners that refuse to give change scrutinize all bills over 20 pesos, rubbing them and tilting them and holding them up to the light, sometimes even under an ultra-violet lamp. New arrivals at the international airport receive leaflets about how to spot fake banknotes.

“Everyone I'd spoken to about Buenos Aires added an aside about keeping an eye out for bogus notes,” said U.S. citizen Season Butler on a visit to Buenos Aires from her home in London. But she never thought to check what she got from an ATM at a large bank in a posh section of town. She only discovered later that she had gotten not one but two false bills from the machine, leaving her stuck with 150 non-pesos — about 40 non-dollars — and no recourse.

“Generally, counterfeit money circulates through institutional routes,” Ferrer said . “There are very weak controls in the banks. Counterfeit notes are practically permitted.”

Which leaves peso users between a rock and a hard place — or, more concretely, between fake paper and no metal at all.

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