Wednesday, September 22, 2010

20,000 Colones Bill Good or Bad Idea?

CostaRica.ColonImage via WikipediaIt looks as if the 20,000 colones bill will be coming out shortly. It was scheduled to come out but was sent back for a small error found on the bill. I am no economics major but I two doubts in my mind why this might be a bad idea. Read and let me know what you think?

Yesterday I saw Laura Chinchilla plead to the United Nations for help with the invasion of the drug-trade in Costa Rica. I think everyone can agree there is more drugs and crime than before and nobody wants what is happening to Mexico to happen to Costa Rica. As far as I know Narcos deal mostly in cash and yes they probably deal a lot with dollars but Im sure the Colone makes for an easy transfer at times to not have so many cash dollars floating around. Would now be the time for the release of the larger Colone bill with the arrival of a Narco cash run business knocking at the doors of Costa Rica.

My second thought is I often hear Costa Ricans say that there is cash in the streets but nobody wants to spend. If you put larger bills in peoples wallets it just means they will spend less. A larger bills is like having a savings account in your wallet. It almost hurts to break the bill and get all the small change. How often to you find yourself saying "I only got a $50 and I dont want to break it".

With this said I really dont know if either of them make sense since my Economics backround is level with my PHD in nuclear physics (neither really exist). If you have thoughts on the release of the new bill I would love to hear?
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