08 October 2005

Inefficient currency distributions

Alex has a great post on the reluctance of Brazilian merchant to change large bills. Today I got to see just how far a vendor is willing to go to hold onto those extra small bills. As I picked up my laundary from Speed Queen the total came to R$22. Ready to hold my ground, I pulled out my R$50 bill and gave it to the attendent. As expected, I was asked whether I had a R$2 bill so that I would be paying with a 50 and 2 and recieving a 20 and 10. [i.e., (50+2)-(20+10)=22].

Here is where the battle begins, because I want the small bills too. I say I have no R$2 bills, but concede that I do have a R$1 bill, noting that unfortunately that won't help in the current situation. To my surprise however, the attendant took the R$1 bill, and still gave me a 20 and 10 in return. So I ended up paying (50+2)-(20+10)=21, saving ONE REAL!!! Wahooo.

To the Brazilian government: Print more smaller bills and take up some of the bigger ones. It appears people are more willing to deal with the extra hassle of storing and counting a larger number of bills than the (in-)convenience of the larger denominations.

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