Monday, Sep 12, 2016

Coins, coins, and more coins

Coins, coins, and more coins

I want to talk about money and the availability of “change” in Ecuador. It is an interesting dance. First a little background. Ecuador uses US currency as its official currency. All paper bills used here are exactly what we see and use in the US. Coins here are what we see and use in the US, as well as some “Ecuadorian” coins. The denominations of the Ecuadorian coins are the same- penny, nickel, dime, quarter,and  half-dollar, but the design is different than on a US coin.

All money used in Ecuador is printed and minted in the US, even the coins with an Ecuadorian design on them. Ecuador pays a fee to the US when they buy money for the country. So a dollar costs the government more than a dollar to bring into circulation.

Because money costs more than its actual face value to put into circulation, there isn’t an over abundance of it. This directly affects the amount of “change” vendors and stores have on hand. It is almost impossible to be able to receive change for anything larger than a $20 unless you are at a bank or large retail business.

Now some of the large supermarkets will take your $50 or $100 dollar bills when buying groceries, but your total bill better be over $40 and $80 respectively, or watch how the cashier will balk. You will be asked for smaller denominations, or for more exact change. Even if you hand a $20 over for something that is under $10, you will often be asked if you have a $10.

The same is true for the odd cents amount. If your bill is $9. 36 and you hand over a $10, you will often be asked if you have the 0.36 cents. There is a resistance here to “make change”. I never understood why until someone explained the cost of bringing money into Ecuador.

An interesting thing happens when extranjeros spend money here. As we pull money from ATMs, the banks (or government) are not having to pay the fees normally associated with bringing US money into circulation. Our home banks have to make good on the funds withdrawn, so the transfer happens without the additional charge. This means that when extranjeros spend money via this method in Ecuador, we are actually adding more value into the economy than the money we are spending. Pretty cool huh.

Today I was at Corral which is a large “Walmart-like” retail chain in Ecuador. Any particular store, in a city like Cuenca, is moving thousands and thousands of dollars through its cash registers each day. I make it a point when I am in these stores to always use my biggest bills and “get change”. The reason is simple; when I am in a taxi, or at a small tienda, or at the farmers market, using a $10 bill can be an issue. These vendors are always asking for the smallest denominations and exact change for what is owed.

The amount I owed at Corral was $62.50. I gave the cashier four $20 bills. He gave me $2.50 in coin, and a $10 bill, and asked me to wait while he got change. He did not have any $5 bills in his register. I watched him give a manager a $10 bill so my cashier could get two $5 bills back. The manager left and I’m not exactly sure where he went, but he came back and said he had no $5 bills. My cashier then gave me another $5 in coin…two $1 coins, four half-dollar coins, and four quarters. Crazy right?

I was happy to have all those coins because in Ecuador they are the most useful. And by the way, rarely will you see a $1 bill used here. The $1 coin is what is most commonly used. It makes sense. The lower dollar amounts are exchanged most often in transactions, so the dollar coin lasts years longer in circulation than a dollar bill would. Using dollar coins took some getting used to for me, but now it seems very normal.

So this is a tip about surviving in a limited “change” environment. Always use your largest bills at businesses that have, and can more easily, provide change. Then as you buy goods from the mom and pops, you will have the smaller denomination bills and exact change they ask for.