Monetary disunion - the nature of money and the Argentine currencies at the turn of the Millennium

The article discusses 3 approaches to the ontology of money -commodity money, credit money, state money- in search for theoretical elements to understand the monetary fragmentation in Argentina around the crisis of 2000-2002. In the context of a severe fiscal and financial crisis at that time, the national government adopted a relaxed approach over its monetary control. Argentina went beyond the conflicts of monetary unions and in reality became a monetary disunion. The fragmentation took the shape of parallel monetary circuits and there were multiple currencies circulating at the national, sub-national and local community levels. Any given household in Argentina would use, store and count value in several currencies that were not fully convertible to each other. Several elements of the heterodox approaches to the nature of money are combined to understand why monetary disunion functioned for several years and sustained a large modern economy. The article contends that provincial currencies emerged as circulating debt that depended on federal sovereignty and subnational tax collection capacities. In the meantime, community currencies started as units of account to facilitate trade among neighbours, who could not conceive of any commodities that would serve as general means of payment. Once the community currencies were institutionalised, membership climbed to the thousands of participants that adopted them without questioning their origins. They became pure credit monetary circuits, in Schumpeter’s definition, in which the initiators adopted the role as issuers, however imperfectly, and the money took the extrinsic value of the goods being exchanged. The fact that several currencies of diverse monetary origins circulated at par for several years shows that monetary multiplicity would not be exceptional without the specific actions of the state to supress monetary plurality. Moreover, it raises doubts on whether monetary unions, which enforce one type of money per territory, are best equipped to satisfy the diverse monetary demands, for various monetary usages, localities and social groups.