Argentines Hold More Than $50 Billion in U.S. Currency. Here's How We Know

Photograph by Scott Eells/Bloomberg

A lot of U.S. dollars are tucked away somewhere in Argentina, most likely in stacks of $100 bills. Seven years ago, the U.S. Treasury, working with the Federal Reserve and the Secret Service, estimated that in the early 1990s Argentines held $20 billion in cash, a number that by 2006 had grown to “perhaps $50 billion or more.” That year there was a total of about $768 billion worth of dollar-denominated cash in the world, which means that someone in Argentina held at least one out of every 15 cash dollars.

How about now? The Fed is chary with its data releases. One table in a 2012 Fed paper on demand abroad for U.S. currency tells us that the annual net inflow of commercial shipments of bills denominated in dollars to Argentina and the former Soviet Union has increased since 2006 by 500 percent. In 2011, that growth rate stood at 48 percent, while total demand for U.S. currency, in America and abroad, has increased only about 10 percent. It’s unlikely that all of that growth came from the former Soviet Union alone; otherwise, why include Argentina at all? Demand for large dollar cash transfers to Argentina since 2006, then, has outstripped demand for dollar cash overall in the world.

So it seems safe to say that today Argentines hold probably well more than $50 billion, and well more than one in every 15 dollars. (This is why the government of Cristina Kirchner is so furiously digging at the country’s undeclared wealth. Not to bring home what Argentines hold abroad, but to uncover some of those dollars Argentines have—literally—at home.)

All these numbers contain qualifiers like “probably” and “well more than” because the precise number of physical dollars anywhere is hard to pin down. To get under Argentina’s floorboards, we have to start with what we know: how many dollars the Treasury actually prints. According to the Fed, for the last several decades growth in printed dollars has been one to two points greater than growth in nominal U.S. GDP. That is, the number of dollars has grown faster than growth in the U.S. economy and inflation would suggest, which means the dollars are going elsewhere. This difference tends to spread wider with specific crises, such as Argentina’s in 1997. And growth is also far more pronounced in $100 bills than it is in twenties or tens, which suggests that the bills serve as a store of value, rather than as a medium of exchange. It’s difficult to buy daily items with a $100 bill. But stacks of hundreds are less bulky underneath a mattress.

It’s harder to figure out where exactly these extra hundreds have ended up. Some banks specialize in shipping large amounts of bills among countries. The Fed tracks these shipments, which is how we know what was going to Argentina and the former Soviet Union. But the Fed also holds the data close, as it’s a source of market information for the cash-shipping business. Public use of this information is infrequent, vague, or doesn’t identify countries. Without pointing any fingers at any specific hoarders, a 2011 paper (PDF) by the Federal Reserve Bank of New York uses the data to determine, for example, that foreign use of U.S. dollars is tied not to average inflation over time, but a specific generational memory of hyperinflation. As in, the paper is careful not to say, Argentina.

The bill shipment data, along with data from customs offices, are good only for cash amounts greater than $10,000, the minimum that must be declared at a border crossing. To guess at lesser wads of hundreds in traveling pockets, the Fed uses a technique invented in 1893 to estimate fish populations. If we tag a bunch of fish, then count the number of tagged fish among the next catch, we can guess how many fish are out there. The Fed does this with $100 bills, “catching” them with monthly cash processing data at regional Federal Reserve offices and comparing them to trends in confirmed shipments of larger amounts. We know that the number of hundreds in foreign circulation rose from 58 percent to 62 percent between 2008 and 2011. We do not have an estimate of where they went. The Fed does. It’s a good bet Cristina Kirchner does, too.

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