Is printing money abroad the solution for Latin American countries?
Many countries choose to produce their bills in other latitudes because it is an expensive and delicate process, some others have different reasons
Although in recent times cash has been migrating to digital payment means. According to the newspaper El Economista, approximately 9% of the money circulating in the world corresponds to its most liquid form (bills and coins).
Leer en español: ¿Imprimir dinero en el extranjero? Una solución para los países latinos
This cash, in some cases, is produced within its country of origin, however, there is a large number of countries around the world that do not produce their own money and entrust this task to a group of specialized companies.
The main reason for the latter to happen is that it is not profitable for smaller countries to invest in printing and other technologies to produce a small number of banknotes that their economy needs.
In the case of Latin American countries, there are some that produce their own money, others produce some part of it, others that do not and others that do not even have their own currency.
In the latter case, there are countries like Ecuador and El Salvador. Countries whose economy is formally dollarized, that is, depending on the number of dollars printed by the Federal Reserve of the United States. Many analysts point to this as one of the most problematic obstacles to dollarization, since it makes it impossible for countries to maintain an autonomous monetary policy.
We also find the case of Panama, which, although its economy is not formally dollarized since the Balboa still circulates, most of the money circulating in the streets of the country is US dollars.
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It is not an autonomous process, not even for countries with their own mint
Although in theory, the countries of the region with the most important economies have their own mints, where their central banks send to print the that is necessary, these are not always supplied and do not always comply with the totality of this function.
Brazil, Mexico, Colombia, Argentina, Chile, and Venezuela have their mint. However, they depend on a large amount of imported inputs to produce the notes and coins so that of some currency they end up being dependent on the foreigner as well.
According to the BBC, there have been cases in which countries such as Argentina or Paraguay have used the mints of Brazil and Chile to take charge of printing part of the bills they needed to put IGNORE INTO circulation.
There is also the case of Venezuela, a country that is experiencing a shortage of cash and that in recent months has updated its monetary cone and has made a monetary reconversion where the authorities of the central bank of this country have reported the arrival of aircraft loaded with cash as reflected in the DW medium.
Finally, the countries of the region with smaller economies have resorted to printing their tickets abroad due to the high costs involved in carrying out this task. This is the case of countries such as Bolivia, Costa Rica, Guatemala, Honduras, Nicaragua, Uruguay, and Paraguay.
LatinAmerican Post | Daniel Ramírez Pérez
Translation from: '¿Imprimir dinero en el extranjero? Una solución para los países latinos'
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