The currency of Chile is called the peso. In Spanish, this word means "weight" or "certain weight." The modern version of the peso has been in circulation since 1975. The official symbol of the Chilean currency is the Latin letter S, crossed by one or two vertical lines. This mark is available in almost all text systems. Since this symbol is associated with the US dollar, the acronym CLP (Chilean Peso) is often used to avoid confusion. The monetary unit of the South American republic formally consists of 100 centavos. However, due to the low exchange rate of the Chilean currency, issuing small coins does not make sense from a practical point of view.
Old peso
The first sample of the monetary unit of a South American country was published in 1817. The old version of the peso was equal in value to 8 Spanish colonial realities. Subsequently, the minting of copper coins began, indicating the face value in centavos. In 1851, the peso became the equivalent of 5 French francs, thanks to the content of 22.5 g of pure silver. The standard weight of gold coins was 1.37 g. In 1885, it was decided to tie the currency of Chile to the British pound and establish a fixed exchange rate. This happened as part of the introduction of a paper money supply system with precious metals, known as the gold standard. In 1926, the Chilean government changed course from 13 to 40 pesos for one pound. A few years later, the gold standard was suspended. Chile's currency value has fallen even lower. In 1960, the peso was replaced by an escudo at the rate of 1000: 1.
Banknotes (1817-1960)
The first Chilean paper money was issued by the Treasury of the province of Valdivia in the middle of the 19th century. Their face value was 4 and 8 reais. In the 70s of the century before last, a number of private commercial banks began issuing banknotes. In 1881, the Chilean government issued treasury bills convertible into gold and silver. This event marked the end of the issue of paper money by private financial institutions. In 1925, the issuance of treasury tickets became the prerogative of the Central Bank of Chile. Denominations of banknotes of that period ranged from 1 to 1000 pesos. Inflation caused by the abolition of the gold standard required the appearance of larger banknotes. In the mid-20th century, the production of notes in denominations of 50 thousand began.
Escudo
What currency in Chile replaced the peso and what caused the need for monetary reform? The creation of a new national means of payment called escudo was part of the plan for socio-economic transformation. However, the government did not succeed in the long run. In the early 70s of the last century, Chile experienced a rapid decline in production. This has caused a rise in unemployment and an active withdrawal of investments from the country. The administration of President Salvador Allende unsuccessfully tried to cope with severe economic depression .
Escudo served as the official currency of Chile from 1960 to 1975. The new paper currency issued by the Central Bank of the country was a modified version of the old pesos. Their denominations were 1, 5, 10, and 50 escudos. However, uncontrollable inflation, resulting from severe economic problems, made inevitable the introduction of much larger denominations. In 1974, the Central Bank of Chile issued bank notes in denominations of 10 thousand escudos.
New peso
After the overthrow of President Allende, a military dictatorship was established in the country. The government of General Pinochet decided to replace the constantly depreciated escudo with a new version of the peso. The reform was carried out in 1975. In the process of exchanging for a thousand escudos they gave one peso. Until 1984, coins with a denomination indicated in centavos were minted. In the future, the need for them has disappeared as a result of inflation.
During the existence of the military dictatorship, the image of a woman with broken chains in her hands was minted on coins of 5 and 10 pesos. It symbolized the liberation from communist ideas. After the removal of General Pinochet from power, the design of the coins was changed. They appeared the image of Bernardo O'Higgins, a fighter for the independence of the Spanish colonies in South America, who in the early 19th century for several years served as the supreme ruler of Chile.
In the early stages, the Central Bank, in the hope of success in the fight against inflation, issued only banknotes in denominations of 5, 10, 50 and 100 pesos. But subsequently, financial authorities were forced to replace them with coins. Currently in circulation are banknotes of 1, 2, 5, 10 and 20 thousand pesos.
In 2004, Chile began to issue notes made from polymers. This material increases the life of banknotes several times and prevents the absorption of moisture and dirt. This was the first issue of new banknotes in Chilean history , the reasons for which were not related to inflation. At the moment, only banknotes of 10 and 20 thousand pesos are still printed on paper. All other notes are made of polymers. Thanks to technologies that can only be used on plastic, new banknotes have a high degree of protection against counterfeiting.
Interesting Facts
Some Chilean banknotes received unofficial names in accordance with the names of prominent personalities whose portraits are printed on them. For example, a banknote of 5 thousand pesos is known as "Gabriela". It depicts Gabriela Mistral, a Chilean poetess, diplomat and Nobel Prize winner in literature. A bill of 10 thousand pesos is sometimes called "arturo" because of the printed on it portrait of the heroically killed in the 19th century naval officer Arturo Prat.
Rate history
In 1999, the monetary authorities of Chile established a floating exchange rate regime. However, the Central Bank reserved the right to intervene on the exchange in order to prevent the excessive depreciation of the national means of payment. The exchange rate of Chile against the US dollar has steadily declined over several decades. At the end of General Pinochet’s reign, one American monetary unit was worth about 300 pesos, now it is more than 600. The exchange rate of the Chilean currency to the ruble of the Russian Federation is not determined during direct trading. It is artificially calculated using quotes of the dollar-peso pair. This method of comparing currencies is called a cross rate.