Historical Sketch

In the 16th century, the Spanish possessions in Peru were gradually extended southward. The newly conquered lands were consolidated into the Viceroyalty of the Rio de la Plata in 1776, consisting of the three audiences of Buenos Aires, Charcas, and Santiago. The latter proclaimed the autonomous Kingdom of Chile in 1810. The Declaration of Independence of the United Provinces of the Rio de la Plata of 1813 triggered a long-lasting civil war among the insurgents, between supporters of a centralized state ("Unitarians" that ruled Catamarca, Córdoba, Mendoza, La Rioja, Salta, San Juan, San Luis, Santiago del Estero, Tucumán) and those of a federal state ("Federalists" of Buenos Aires, Corrientes, Entre Rios, Santa Fé). The creation of the Argentine Confederation in 1853 could not settle the conflict completely, as the at that time Unitarian government of Buenos Aires did not join, and became de facto a separate state for the next decade. In 1862 finally, the constitutional differences could be resolved, and Buenos Aires joined the Confederation to form the Republic of Argentina. The southern territories remained unclaimed for another half a century. In 1860, the French adventurer Orélie-Antoine Thounem proclaimed himself King Aurel-Anton I of "Araucania and Patagonia", the southern lands west and east of the Andes. Chile quickly occupied so-called "Araucania" in 1862, while Argentina did not move as the claim for "Patagonia" was not considered a threat.

Monetary History Overview

The civil war that went on for four decades after the declaration of independence rendered the establishment of a national currency impossible. The minting of silver and gold coins in the Spanish bimetallic standard continued in the mints of Potosí and La Rioja but was by no means sufficient. In 1820, the economically dominant province of Buenos Aires began issuing paper money. Initially on par with the specie coinage it became inconvertible in January 1826. The 1st Argentine Peso (Corriente) became the de facto currency in most of the provinces. It continually depreciated against specie as the paper money issuance proliferated during the civil war with more and more banks and local governments joining in. The northern provinces were using Bolivian currency for payment transactions and accounting, the province of Córdoba was running its own minting of silver coins. The Argentine Confederation of 1853, uniting all provinces except Buenos Aires, did not attack the monetary situation. The government of Buenos Aires restored convertibility of paper money in July 1857 by fixing the rate against silver and gold. The 1862 republic took over the Buenos Aires monetary system, but a true national currency would need another two decades to become reality. After two unsuccessful attempts in 1875 and 1878, Argentina enacted the first national currency law in 1881. The 2nd Argentine Peso was defined as gold currency, but convertibility could be maintained only until 1885, and the production of specie coins had to be abandoned. In 1887, paper money issuance was regulated as the commercial banks needed to prove solvency to obtain licence from the state-owned National Bank. Due to the economic crisis of the 1890s, this system collapsed again as many of the licensed banks were no longer able to guarantee their banknote issuance. In 1899, the currency was comprehensively reformed. The Peso was devalued and re-pegged to gold. The government installed the Exchange Office as a currency board, and the licences for money issuance were abrogated, except for the National Bank, which was later transformed into the Central Bank of 1935. The paper money of the other commercial banks was withdrawn until 1903. The Peso's gold standard was suspended in 1914 and could be restored only for a short period between 1927 and 1929. In the following decades, the Peso had multi-tier rate structure. The exchange rate system was simplified several times, just to get split up again briefly afterwards. In January 1957, the exchange rate was unified once more, and the Peso got pegged to the US Dollar. Two years later, this had to be abandoned again, and the Peso was devalued and floated. It lost 95% of its value until 1967 when it got re-pegged to the US Dollar. In January 1970, a currency reform was carried out. Two zeros were cut, and the 3rd Argentine Peso became the new unit of account. Six month later, another series of devaluations set in, and the multiple rates were reintroduced. In 1975, the exchange rate got floated, and hyperinflation reduced the currency value by a factor of almost ten thousand until 1983. The next redenomination removed four zeros, but inflation continued on the 4th Argentine Peso since the economic conditions were unchanged. Two years later, in June 1985, another economic reform was attempted, including another currency redenomination. Two more zeros were removed creating the Argentine Austral as new currency unit. However, inflation could not be defeated. The economic situation stabilized only after the end of the military dictatorship. In January 1992, the economic and monetary reform was attempted through dollarization. Four zeros were removed at the introduction of the 5th Argentine Peso, on par with the US dollar, and its stability could be maintained for a decade. After a financial crisis in the early 2000s, the Peso got devalued by 37.5% in January 2002, and lost another 50% until the end of the year. For the rest of the decade, the monetary situation remained fairly stable. In the mid-2010s, the Peso began depreciating again. Inflation gradually increased towards the end of the decade and reached a level of 100% annually in the early 2020s.

Argentina joined the International Monetary Fund (IMF) on 20.09.1956.

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