Banxico reduces budget to manufacture banknotes

MEXICO CITY (El Universal).— The Bank of Mexico (Banxico) reduced its 2024 budget for the production of banknotes, while it will increase spending on coin minting.

For this year the central bank is not scheduled to issue new pieces, but it will prepare for the replacement of 20 peso bills with coins of the same denomination that will begin next year.

Likewise, it had planned to launch a new 2 thousand peso bill, but only based on the needs of users, which has not happened until now.

The Banxico Government Board approved a budget considering the Value Added Tax (VAT) of 14,653 million pesos, according to a report from the central institute to the federal Executive and the Congress of the Union. The above means a growth of 838 million pesos once morest the 2023 budget, a variation of 1.2% in real terms.

For spending related to the constitutional mandate of providing banknotes and coins to the economy, 9,437 million pesos will be allocated, which, compared to the amount approved for 2023, represents a real decrease of 0.4%.

In supplies for bills and coins, the budget will have a marginal decrease of 0.1%, with an authorized amount of 6,155 million pesos. Of that amount, 4,588 million pesos will be allocated for the acquisition of metallic currency, 16.6% more compared to 2023.

Banxico does not manufacture the coins, a task that corresponds to the Mexican Mint, which depends on the Ministry of Finance and Public Credit (SHCP). However, their minting as legal tender is only carried out by express instruction of the central bank, which is also responsible for putting them into circulation and their design, if ordered by the Congress of the Union.

Meanwhile, in inputs for banknote production there is a cut in real terms of 29.7%, authorizing an expense for this year of 1,567 million pesos.

When breaking down the budget for banknotes, it is indicated that 901 million pesos will be spent to purchase security substrate, once morest 1,379 million in 2023.

In inks, varnishes and security elements, the Banxico collegiate body endorsed an item of 569 million pesos, less than the 664 million in 2023. These inputs are essential so that each piece is not copied by criminals.

Durable materials

Currently, banknotes are manufactured in paper or cotton, as well as in polymer or plastic substrates, which have greater durability.

“Security measures make counterfeiting difficult and increase the population’s confidence in its use,” says the Education area of ​​the central institute.

On the other hand, Banxico reported that as part of the budget this year there will be a total of 2,381 million pesos for current spending, an increase of 1.8% compared to what is guaranteed for 2023. It includes more than one billion pesos for remunerations and contributions such as salaries, taxes and social security contributions, and personnel services. Also administrative expenses that Banxico incurs to fulfill its functions.

It is mentioned that, in physical investment, the acquisition, construction, expansion, adaptation and improvements of real estate are considered, as well as the acquisition of machinery, furniture, equipment and vehicles.

To provide the country’s economy with national currency and fulfill its constitutional mandate, Banxico relies on private banks to put into circulation the money issued both on its own account and by the Mint.

To put cash into circulation, in the first half of 2023 it delivered 1,730 million banknotes to credit institutions, of which 528.4 million were 500 pesos, 440.9 were 200 pesos, and 359.9 million were 100 pesos. The smallest quantities provided were the thousand peso, 20 and 50 peso bills with 55.9, 89.5 and 228.1 million units, respectively. As for coins, he gave the banking system 1,97 million pieces to provide to the public, of which almost 3 million were one peso, followed by 50-cent coins, with 250 million. Of 2 pesos and 5 pesos it was a similar amount for both denominations, 153 and 155 million coins. The same for those of 10 and 20 pesos, with 122 and 117 million pieces. In addition, the banks received less than one million pesos in 10 and 20 cent coins. The preparation and approval of the Banco de México budget was carried out based on the macroeconomic indicators established in the Income Law and the Expenditure Budget of the Federation. Likewise, in cases defined by the Governing Board of the central bank itself. The Data 1,730 million banknotes were put into circulation by Banxico during the first half of 2023.