Mexicans leery of new 1,000-peso bill
http://www.signonsandiego.com/news/mexico/20041116-9999-1b16...
They worry big note will be hard to break
By S. Lynne Walker
November 16, 2004
MEXICO CITY ? Mexico's new 1,000-peso bill hit the streets yesterday, leaving ordinary folks scratching their heads and asking a simple question:
Where are we going to get change?
Mexicans have trouble finding change for even a 200-peso bill, which is worth less than $20. So, asked preschool teacher Maribel Juarez, 27, how are
working people going to change a bill worth roughly $88?
Mexico's banks won't change currency for anyone who isn't a client, and only 22 percent of Mexicans have bank accounts.
Big stores won't change big bills, either. They have lots of change, but they hoard it, because coins and small bills are a rare commodity. Taxi
drivers, restaurateurs and small-shop owners tuck away their coins, too.
Juarez earns 3,000 pesos a month ? three of those new bills if she's unlucky enough to get them. She thought about the prospect and shook her head.
"It will just be one more problem," she said with a sigh.
The Mexican government knows that change is as rare as, well, a 1,000-peso bill.
"This is a problem that worries us," Manuel Gal?n, director of programming and distribution for the Bank of Mexico, said in an interview yesterday.
"We are taking steps so the problem of change in Mexico doesn't get more complicated."
Gal?n said the Bank of Mexico, which operates like the U.S. Federal Reserve, plans to announce an agreement in early December with all of the
country's commercial banks that will "make changing bills easier."
Once that agreement is in place, people will be able to walk into any bank and get change, he said. As simple as that sounds, it would represent a
huge shift from current bank practices.
Although the 1,000-peso bills weren't distributed until yesterday, stacks of the new bills had been sitting in the massive vaults at the Bank of
Mexico since 2002, when 50 million ? a two-year supply ? were printed. The purple-and-green bills bear the likeness of Miguel Hidalgo, who led
Mexico's independence movement in 1810.
The bills were held for two years because the Bank of Mexico wanted to first test the demand for 200-and 500-peso notes.
Surprisingly, there are now more 500-peso bills ? worth about $44 ? in circulation than 20-peso bills, Gal?n said. About 16 percent of all currency in
circulation is 500-peso bills, while 12 percent of the currency is 20-peso notes, which are worth about $1.75.
Financial concerns suggest the need for Mexico's first bill valued at almost $100 in 30 years, Gal?n said.
National companies and big businesses can run more efficiently with larger-denomination bills, Gal?n said. And the many Mexicans who stash their money
under mattresses instead of in banks may enjoy the convenience ? and the comfort ? of larger bills.
Mexico's economy has strengthened in the two years since the bills were printed, he said. Inflation has leveled off at about 4.5 percent, and the
exchange rate is hovering at 11.36 to the dollar.
Those factors, combined with the obvious savings of printing more 1,000-peso bills and fewer 500s and 200s, convinced the Bank of Mexico it was time
to release the new bills.
In anticipation of the Nov. 15 release date, hundreds of thousands of carefully bundled 1,000-peso notes were shipped to six key cities across the
country, including Mexicali. By yesterday afternoon, the bills had started showing up at banks for distribution to the public.
At Mexico City banks, curious customers asked tellers to show them the new bill.
But many were skeptical about the need for a high-denomination bill in such a poor country. Some suspected it signaled a peso devaluation.
"I think it is a joke that they are even putting out this bill," said Virginia Garcia, 38, a preschool teacher. "There are so many people who work for
minimum wage in this country."
For Alfredo Mart?nez, the 1,000-peso bill is "a luxury, an unnecessary expense."
"They are trying to make Mexicans believe the economy is good, that Mexico is an economic powerhouse, " said Mart?nez, 30, who works at a Mexico City
communications firm. "The reality is different."
Gabriel Pages, 53, a legal adviser to one of Mexico City's precincts, was initially opposed to the new bill. But the distinctly dark humor with which
Mexicans view their country reshaped his thinking.
Pages recalled a city official who was seen on videotape earlier this year stuffing wads of money in a suitcase and his pockets, sparking a national
political scandal.
"With these new bills, he wouldn't have had so much trouble putting all that money in his suitcase," Pages said, laughing.
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