Argentina became a global supplier of commodities thanks to its fertile soil and vast territory. The country was a conservative republic and the state administration was dominated by a political and social elite.
Between World War II and 1976, the industrial sector became more and more complex—particularly heavy industry sectors from 1958. Domestic demand turned into the main driver of the economy after a remarkable redistribution of income during the Peronist government, which raised wages and improved labor conditions while encouraging growth. Afterwards, José Alfredo Martínez de Hoz caused the economic and distributive policy to change direction. He had been Minister of Economy of the Argentine military dictatorship that assumed control of the country in 1976. The measures adopted made heavy industry collapse, plunged Argentina into endless indebtedness, unleashed frenzy financial speculation (from which major economic groups benefited), and led to increasing exports. Curiously, such a rise was not fostered by better conditions; rather it was explained by a strangled domestic market in a context of plunged wages. Against the backdrop of recurring crises, the Argentine currency was the main target, depreciating dramatically.
In the last decades of the 20th century, democracy was finally reinstated, after various dictatorial governments. Democratic governments endeavored to recover the purchasing power of our currency, though achieving different outcomes. In turn, globalization expanded the scope of international financial crises.
Banco Nacional (1872 – 1891)
This privately and publicly owned institution was founded in 1872. As set out by law, its legal address was to agree with the place of residence of federal authorities or the capital city of Argentina. It began operating a year later in the city of Buenos Aires, during the administration of Domingo F. Sarmiento, and opened branches across the country. Banco de la Nación Argentina, which continues to operate as of this day, was founded in 1891, after Banco Nacional was wound up.
“Peso Moneda Nacional” Line
This monetary line was issued from 1881 to 1970.
Law on Monetary Unification (1881)
During the first presidency of Julio A. Roca (1880-1886), the National State consolidated and the monetary system was unified. The first Argentine Mint standardized the country's currency by coining pieces of 5 pesos (“argentino oro”), 1 peso (“patacón de plata”) and cents in silver and copper.
Domestic Guaranteed Banks
In 1887, President Miguel Juárez Celman signed into law the bill on “domestic guaranteed banks”, which allowed public and private banks to issue banknotes in a standardized format. Every money issuer bank was bound to set aside a certain amount for reserve requirements in precious metal which was managed by the national State to guarantee the value of money. This system led to a strong rise in circulating money—as triggered by external indebtedness incurred to back reserve requirements—giving rise to a speculative wave of investment in bonds and plots of land. Contrary to expectations, the guaranteed bank system and the speculative bubble suddenly crashed in 1890, with a major financial crisis, which in turn unleashed a political-military revolution and forced Juárez Celman to resign.
Caja de Conversión (1890 – 1935)
The financial crisis that put an end to money issuance in the hands of domestic banks under the guaranteed bank system made President Carlos Pellegrini work hard to restore public trust in a national institution—the Caja de Conversión. The goal was to organize domestic money issuances, oversee currency in circulation and protect reserves in precious metals. The Caja de Conversión also regulated the exchange rate, allowing or disallowing the convertibility of currency so as to benefit exporters in different stages of the cycle.
The Caja de Conversión issued “macro-banknotes” and cupronickel coins under the Pesos Moneda Nacional line, on behalf of the Argentine Republic, as a sign of progress. At the same time, private and provincial issuances were banned. These new banknotes proved to be exceedingly large and the quality of the paper (French), poor. Hence, they were rapidly replaced by a new smaller series made of Italian paper.
Pesos Moneda Nacional – New Designs
In 1942, the Argentine Mint bought new machines for intaglio printing, which led to a more elaborate design and enhanced security standards. The Argentine Mint opened a new production plant in 1944 and some years later upgraded the technology developed for coining and printing banknotes, which in the early ‘50s served to produce cash in the country—from design and engraving to printing.
Coins also changed in design. For the first time, they featured images in commemoration of historic events or figures. .
“Pesos Ley 18.188” Line (January 1, 1970 - May 31, 1983)
On April 15, 1969, the military government knocked two zeros off the currency, and ordered the issuance of a new line of banknotes and coins. Thus, 1 peso Ley 18.188 equaled 100 pesos moneda nacional.
The new line standardized the size of banknotes and featured different Argentine landscapes on the reverse. Commemorative coins were issued in silver for the first time to celebrate the 1978 Football World Cup, along with the anniversary year of historic or military events.
“Pesos Argentinos” Line (June 1, 1983 - June 13, 1985)
The military administration brought about a new change in circulating money which came into effect in 1983 upon the enactment of Law No. 22,707 in answer to a new devaluation of the currency. In the new monetary line four digits were dropped from the peso Ley 18.188. Thus, 1 peso argentino equaled 10,000 pesos Ley 18.188.
After democracy was reinstated in December 1983, new designs depicted constitutional matters on banknotes, such as the portrait of Dr. Juan Bautista Alberdi or the painting titled “Los Constituyentes” (1853) by Argentine painter Antonio Alice.
In 1985, a commemorative piece was launched in honor of the 50th anniversary of the Central Bank of Argentina.
“Australes” Line (June 14, 1985 – December 31, 1991)
President Raúl R. Alfonsín (1983 – 1989) had “inherited” from the military government a massive external debt, a devaluated currency, and a scenario of hyperinflation. In response, the “Austral Plan” was launched, changing once again the currency unit, which lost three more zeros. As with previous changes in currency, the banknotes of the peso line were restamped as a transition to the new banknotes.
Banknotes kept their size and displayed the portraits of former Argentine presidents, starting with Bernardino Rivadavia (1826), in chronological order as the denomination increased.
“Pesos Convertibles” Line (January 1, 1992 – January 6, 2002)
Against a backdrop of hyperinflation in 1991, President Carlos S. Menem signed the Convertibility Bill into Law No. 23,928, which created a new monetary unit called “peso convertible” (convertible peso), equal to 10,000 australes. In addition, the US dollar and this new currency were brought at par value. The value of the peso was backed by the international reserves held at the Central Bank of Argentina. In practice, this meant that monetary and foreign exchange policies would no longer be used as instruments of economic policy.
Banknotes displayed the portraits of Argentine historic figures from the 19th century, with related scenes or buildings of those times.
The appreciation of the peso, the destruction of production, financial speculation, and a huge debt burden caused by convertibility made this plan and the Argentine economy collapse in 2001. These developments marked the end of the peso-dollar convertibility and led to a new devaluation of the currency. At the beginning of 2002, the word “convertible” was removed from banknotes, and the issuance of the “peso” line remained unchanged.