Argentina went through numerous obstacles economical throughout its history, circumventing and moving through very different plans that sought, in themselves, solve inflation and stop the unbridled rise in prices. In the 2001 crisisin the midst of unprecedented instability, the State proposed the quasi-currencies.
At the time, the Government of Fernando De La Rua proposed to put into circulation a series of quasi-currencies as equivalent to the Argentine peso, with the purpose of raising funds to pay the public debt with the country’s provinces. Among the most used were the Lecops and the Patacones in the province of Buenos Aires. They were called “quasi-currencies” because, although they were not official money, they could be used for pay salaries and other obligations of the State.
What were the Lecops?
The Lecops (Letters of Cancellation of Provincial Obligations) They were mainly used to pay salaries and state suppliers, functioning in parallel to the Argentine peso. Issued in denominations similar to the official currency, Lecops helped alleviate illiquidity and allowed transactions to continue during a period of economic uncertainty.
Although they were not official currency, HE accepted in several stores that they had to apply it over time, providing a temporary solution to the shortage of money in circulation.
What were the Patacones?
Patacón Bonds were another quasi-currency used in the Province of Buenos Airesissued in the government of Carlos Ruckaufand were normally equivalent to one Argentine peso. Securities were issued 1, 2, 5, 10, 20, 50 and 100 patacones. There was also the 50-cent patacón, although it had very little circulation. This bond had an interest rate of 7% and there were two series. It is estimated that the total issue amount reached 2705 million patacones.
At first, the circulation of patacones generated controversy, since they were mainly used for pay salaries of public employeesforcing them to enter the economy forcefully. As compensation, citizens were allowed to use them to pay certain taxes.
Due to the crisis, shops also began to accept themin general respecting its nominal value, both in the province of Buenos Aires and in the Federal Capital. However, in the market, Patacones were traded at a value lower than the pesoalthough its price tended to approach the nominal value as its maturity date approached.
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What happened to the Lecop and Patacones
With the end of convertibility in January 2002 and the establishment of a more flexible monetary policy, Argentina began to slowly emerge from the crisis. In this process, the national government focused on remove quasi-currencies from circulation as the economy stabilized. From 2003with the improvement of public finances, the provinces exchanged them for pesos, and finally, In 2004, they completely disappeared from the market.
Quasi-currencies were a symbol of severity of the economic crisis Argentina of those years, an emergency solution to the shortage of pesos and a clear manifestation of the lack of confidence in the country’s financial and economic institutions at that time.
Other quasi-currencies that appeared in 2001
- Bocade (Debt Cancellation Bonus): used in Córdoba, it circulated during the crisis to address the lack of money and provincial debt.
- Quebracho: issued by the province of Entre Ríos.
- Patacones II: a second series of Patacones issued by the province of Buenos Aires when the first series became scarce.
- Petrobonds: issued by the province of Mendoza.
- Federal: issued by the province of Entre Ríos.
Source: Ambito
