Damaged banknotes: BCRA winks at banks and simplifies the refund process

He Central Bank (BCRA) simplified the return process damaged banknotes which applies to the banks through a rule that was issued this Thursday, August 22, after its usual board meeting, in which it establishes that They will be able to send papers up to $200 that are in poor condition without perforating them.

This was established by the Communication “A” 8095which updated the “Cash Management” rules that are part of the ordered text on Monetary Circulation and arranged for “the reception of deposits of damaged “unperforated” bills up to the denomination of $200 (two hundred pesos) in the state in which they were withdrawn from circulation“.

A relief measure for banks

And as she explains close to A voice close to the BCRAin general, Banknotes leaving circulation are perforated before being sent to the regulator.but Banks have vaults full of paper money and much of it is destined to be withdrawn from circulation. This applies, above all, to the lower denomination bills, which have been on the market for a long time and, therefore, deteriorate more. “We managed to collect 100 million $100 bills and we couldn’t manage to perforate them,” says one entity.

It happens that Punching machines have a limited capacity for banknotes. and they need personnel to operate them, which means a great demand for time and human resources to punch millions of papers that are no longer in a condition to circulate. That is why this regulation allows them to send them without needing that previous step.

It was also arranged the revocation of the operation of declaring surpluses of damaged banknotes in the Interbank Banknote Clearingstarting September 9th of this year.

The operating cost of banknotes is a problem for banks

“One of the objectives of the measure, surely, is to lower the operating cost for banks.which will not have to accumulate damaged bills, but will send them directly to the BCRA,” a market source told this newspaper. And he suggests that this may be due to the start-up of a new destruction plant, given that the Central Bank had one under construction.

Cash is a growing problem for bankswhich urgently need to be resolved. For example, one entity informs this media that they move about 1,000 tons of bills per month (it must be taken into account that 1,000 bills weigh one kilo and each one, one gram). And the fact is that the high inflation of the Argentine economy does not match the low nominal value of its bills. The $1,000 bills represent more than 50% of the circulating bills, the $2,000 bills are much smaller and the $10,000 bills only began to be issued in May of this year. Meanwhile, the $20,000 bills will be issued in October.

“Given the high nominality of the prices of the economy and the preponderance of small bills in the market, we have become almost a logistics company. and about half of the bank’s budget goes to that area,” reports a banking source on the matter. He also says thatThey had to build about 13 treasures throughout the country and several sarcophagi in the city of Buenos Aires to solve this problem.

$10,000 and $20,000 bills: a long-term solution, but a short-term challenge

And the problem that is coming soon is that, While on the one hand, the release of the new higher denomination bills may improve the situation because they will gradually replace the smaller ones, on the other hand, the banks will face a bottleneck. in the substitution process, since the latter will begin to have less demand and the larger ones will be used more and more. In fact, in a banking entity they observe that the $10,000 bills that are withdrawn from the ATM are largely sent to the informal economy or are hoarded because they do not return to the traditional financial system.

“Little by little, Those of $500, $1,000 and $2,000 lose market share“, says another source. That is raising alarm bells for many bank treasuries that have to prepare to face the transition towards the predominance of larger bills over smaller ones and, in that framework, being able to get rid of the damaged $10 to $200 bills as soon as possible and with less need for processes in between is a good step for them.